Russia’s small and medium-sized businesses (SMBs) are shutting down at an accelerating pace as higher taxes, weak consumer demand and Russia’s first economic contraction since 2023 squeeze companies already struggling with high borrowing costs and slowing spending.
Some 209,000 SMBs were liquidated in the first quarter, up 9% from the same period a year earlier, Forbes Russia reported, citing data from business analytics platform Kontur.Focus.
The closures are hitting sectors including retail, beauty salons and food services especially hard, according to Tatyana Pushkova, director of business and asset valuation at consulting firm Neo, who said many businesses are struggling to cope with high interest rates, falling demand and rising tax burdens.
Russia’s domestic economy is under mounting pressure as inflation remains elevated and households increasingly cut back discretionary spending despite years of wartime stimulus. Small businesses, long considered one of the weaker links in Russia’s economy, are facing higher operating costs while government support has been scaled back.
Since Jan. 1, entrepreneurs with annual revenue of 20 million-60 million rubles ($274,000-$822,000) have become subject to value-added tax (VAT) requirements, and Russia’s VAT rate itself increased to 22%.
