The agenda: the results of the working visit to China, providing tax deductions to investors under the mechanism of agreements on the protection and promotion of investment, budgetary funding for low-interest farmers’ loans, and amendments to the 2026-2028 draft federal budget.
Mikhail Mishustin’s opening remarks
Report by Minister of Finance Anton Siluanov at the Government meeting
Government meeting
Government meeting
Government meeting
Government meeting
Mikhail Mishustin: Good afternoon, colleagues.
This week, a government delegation visited China. As the President has noted, Russian-Chinese economic relations have reached an unprecedentedly high level. The latest talks with the leadership of the People’s Republic of China, President Xi Jinping and Premier of the State Council Li Qiang, have confirmed our commitment to strengthening comprehensive partnership and strategic collaboration with China still further.
We also held the 30th, anniversary, meeting of heads of Chinese and Russian governments. We discussed significant issues on the bilateral agenda, the progress made in implementing various objectives, set by our leaders.
We have signed a package of important documents aimed at expanding practical collaboration with Chinese colleagues and cooperation, primarily in the sphere of cultural and humanitarian affairs, satellite navigation, investment, energy, transport and the digital economy.
We adopted numerous decisions for exporting more Russian agricultural produce to the Chinese market.
We will continue working with Chinese partners in all key sectors of cooperation.
Colleagues, you should closely monitor the implementation of agreements, reached during the visit, in your respective fields.
Before we start discussing the agenda of the Government meeting, I would like to mention another significant decision.
The President has emphasised that our country can and will manufacture more consumer goods, including machine-tools, equipment, vehicles and medications. For this purpose, it is necessary to launch new production facilities and create modern jobs everywhere, in all regions across the country.
The Government utilises a systemic approach in order to facilitate and promote business initiatives; this includes measures to reduce the administrative burden on businesses, soft-term financing and tax breaks, as well as such essential preferences as agreements on the protection and promotion of investment.
This mechanism was launched five years ago, and about 80 agreements worth nearly 4.5 trillion roubles have been signed since then. They encompass modern greenhouse facilities, wood-working enterprises, food production companies, iron and steel enterprises, and lots more.
Thirteen industrial facilities worth 700 billion roubles have already been put into operation in more than ten Russian regions, with over 8,000 jobs created as a result.
Agreements on the protection and promotion of investment stipulate long-term investment and guarantee permanent taxation terms for them, as well as the preservation of key legislative requirements facilitating their recoupment.
The relevant procedure for obtaining tax deductions has been formulated; this will make it possible to reimburse the parties to these agreements for their expenditures. They apply to federal-level projects, and the relevant regulations have been approved.
It is important that businesses should obtain the most affordable support.
During our working trip to the Pskov Region, we met with residents of the special economic zone and recalled a slogan used at the Suzhou special economic zone in China. This slogan sounds like: “The investor is our emperor,” and the same approach should be applied towards Russian investors.
I suggest that we move on with the agenda. It provides for a discussion on the development of agricultural production.
The President said many times that today Russia not only reliably ensures that it has the food products it needs but also is one of the main food suppliers to the global market.
Demand for Russian agricultural products, both domestically and abroad, is an important performance indicator for assessing the competitiveness in this sector.
Producers with contracts of this kind benefit from short-term preferential lending mechanisms for investment purposes. The Government has already allocated 2 billion roubles to this effect, but considering their current costs, our agricultural producers need additional support.
We will provide an additional sum of over 6 billion roubles for this purpose to finance hundreds of loans.
This will bring the assistance for agricultural producers and processing companies to over 8 billion roubles.
We expect these initiatives to make the domestic agricultural production more resilient while enabling it to keep making quality Russian products for our consumers.
I will now move on to the next important topic on our agenda.
Today, we will review amendments to the draft federal budget for the next three years and the related legislation. We must approve and submit it to the State Duma without delay, since it is expected to review the country’s main financial document in its second reading soon.
We will ensure that specific categories of families with children get additional support. There will also be more support for special military operation participants, of course. In particular, we will increase benefits for paying off mortgages when a third and subsequent child is born into a family in the Far Eastern Federal District. There will also be more benefits for children living in Arctic regions for recreational and health improvement purposes. The Government will also increase housing subsidies for military personnel and will help the Armed Forces expand their educational and healthcare infrastructure.
Substantial funding will go towards expanding the road network and ensuring that regional and local roads comply with the relevant standards. There will be funds for upgrading the public transit fleet and buying over 5,000 vehicles. There will be funding for creating world-class state-of-the-art student campuses, as per the presidential instructions. The same goes for promoting social and economic development in the Donetsk and Lugansk people’s republics, as well as in Zaporozhye and Kherson regions.
Following an extensive and far-reaching debate, we received proposals from members of the State Duma, senators, businesses, experts and the civil society to amend tax law. We took these proposals into account and reported them back to the President.
Small and medium-sized businesses will benefit from a softer VAT transition so that the rate changes gradually, starting with companies generating 20 million roubles in revenue in 2026, followed by companies with 15 million in revenue in 2027, and 10 million in 2028. The Government will also use its authority to rule out any possible risks for taxpayers failing to comply with VAT payment requirements for the first time under the new norms. They could benefit from a moratorium on facing any charges in this connection.
The Government has also taken into consideration proposals it has received from the business community to enable permanent retail outlets in rural and remote areas to keep using tax patents.
There are also measures for promoting domestic software solutions and a preferential VAT framework for IT companies in terms of benefiting from their products. We believe that this must serve as an incentive for further strengthening the sector and achieving our national technological sovereignty.
All these initiatives do not require us to change the overall spending. All we need to do is to adjust the distribution of these funds considering the specific nature of various sectors for enabling them to live up to their potential. This will provide for a smarter use of budget funds while helping our country deliver on its essential undertakings.
I would like to ask Minister of Finance Anton Siluanov to elaborate on all
the amendments we have prepared. Go ahead, please.
Anton Siluanov: Mr Mishustin, colleagues.
Indeed, we have prepared amendments to the federal bill on the federal budget for the next three years, tax legislation and respective legislative acts, for the second reading.
I will cover two blocks of issues, which are amendments to the draft budget and tax-related proposals.
First, budgetary amendments. We propose 590 amendments for the total amount of over 7 trillion roubles for the three-year term. The substantial portion of these amendments concern the country’s defence and security, including the funding for the special military operation.
The other amendments can be divided into three groups.
The first group includes amendments concerning national projects and the redistribution of reserved funds. This redistribution will affect some 300 billion roubles over the three-year term.
I will mention specific projects now.
The Infrastructure for Life National Project.
Mr Mishustin, in your opening remarks, you noted that additional resources will be allocated for roads and for the renovation of regional motorways up to regulated standards. The planned funding is estimated at 75.5 billion roubles. This project will help renovate 700 km of regional motorways and finance the construction of 22 roads.
Additional resources will be allocated for the upgrade of public transit. Some 32 billion roubles will be allocated among Russian regions, with plans to purchase over 5,000 buses that will be transferred to the regions.
The Youth and Children National Project.
This project focuses on building a network of modern student campuses. The funds to be allocated amount to 15.6 billion roubles. This project will produce a world-level university campus called Arctic Star in the Arkhangelsk Region. We will also start building a world-level inter-university campus in Tyumen.
The Data Economics and Digital Transformation of the State National Project.
The project will receive 44.6 billion roubles for the development of communication and broadcasting satellites within a state civilian orbit group in the geostationary orbit. The funding will be provided for the timely upgrade of the existing group, to provide internet services using a fully secure orbital frequency.
The Russian Space Programme up to 2030 National Project.
Five billion roubles will be allocated for the purchase of Earth remote sensing
data, to provide state customers with quality data (resolution of less than 1m)
to solve the tasks assigned to them.
The Production and Automation Equipment National Project.
We will support Russian manufacturers of production and automation equipment by providing customer discounts on their products – totalling more than 3 billion roubles. This initiative will help facilitate the additional sale of over 50 domestically produced machine tools, including CNC systems, as well as more than 140,000 tools.
The Unmanned Aircraft Systems National Project.
We will allocate 2.6 billion roubles to support this initiative. The goal is to strengthen technological independence and enhance the global competitiveness of Russian unmanned aircraft systems in key technology sectors, while also providing targeted grant support.
The second set of amendments concerns the distribution of budgetary funds following the adoption of regulatory acts by ministries, agencies, and the Government. A total of 270 billion roubles is to be distributed over three years for these purposes. Of this amount, 35 billion roubles will be directed toward providing medications for adult patients with high-cost rare diseases, ensuring treatment for more than 190,000 people each year.
An additional 20 billion roubles will be allocated to support efforts under the national immunisation schedule. This funding will enable the purchase of more than 140 million vaccine doses for the immunisation of both adults and children.
We will also ensure the provision of medications for individuals suffering from tuberculosis and HIV, allocating over 9.5 billion roubles for this purpose.
Furthermore, 9.6 billion roubles will be directed toward improving regional, inter-municipal, and local roads and street networks. These funds will make it possible to restore 190 kilometres of roads across several regions of the Russian Federation.
Approximately 15 billion roubles will be allocated to enhance the reliability of the electric grid, with a focus on the regions of the North Caucasus, Northwestern, and Southern federal districts.
The third group of amendments concerns the redistribution of budgetary funds within federal programmes and non-programme activities. A total of 250 billion roubles will be directed toward these initiatives, including 35 billion roubles earmarked for the socio-economic development of the Donetsk People’s Republic, Lugansk People’s Republic, the Zaporozhye and Kherson regions.
We will provide funding for the treatment of children with rare diseases through the Circle of Kindness Foundation, allocating more than 15 billion roubles for this purpose. All of the foundation’s commitments, including the provision of necessary medications, will be fully met with additional resources.
In addition, over 9 billion roubles will be directed toward research and development of advanced technologies as part of innovative projects.
Mr Mishustin,
Colleagues,
On a separate note, I would like to focus on the distribution of financial assistance to the regions.
Next year, 263 transfers are planned, with a total volume of 3.6 trillion roubles. With the amendments introduced for the second reading, we are additionally allocating 11 transfers to the regions of the Russian Federation. These expenditures will be reviewed by a tripartite commission with the participation of parliament representatives.
The second block of amendments concerns tax changes.
The draft amendments were prepared taking into account proposals from the business community and relevant departments, and also provide for the implementation of certain instructions from the President and the Government.
Mr Mishustin, as you noted in your opening remarks, these amendments provide for a softer approach, taking into account proposals from our business community.
The first measure concerns a gradual reduction of the income threshold for VAT payment under the simplified taxation procedure. Initially, we proposed lowering the threshold from 60 million to 10 million roubles. It is now proposed to adjust the lower threshold to 20 million roubles in 2026, then to 15 million in 2027, and finally to 10 million roubles in 2028. This step-by-step transition will allow businesses to adapt to the new rules for applying the special regime.
Given the gradual reduction of the income threshold, it is proposed not to restrict the use of the patent taxation system in stationary trade and in the provision of motor transport services for freight transportation.
It is also proposed to allow small businesses that become VAT payers for the first time to opt out of the reduced VAT rate once during the first year, before the end of the three-year period, to minimise the risk of errors when assessing the most appropriate VAT options for their operations.
A number of measures to improve tax terms are also provided for businesses in various sectors of the economy. For example, it is proposed to maintain the VAT exemption for the sale of rights to Russian software; to allow enterprises in the radio-electronic industry to include, in the share of core income, not only revenue from the sale of equipment for the production of electronic components and radio-electronic products, but also income from design and development services for such equipment; and to grant regions the right to establish an investment tax deduction for expenses determined independently by the regional authorities. The amendments also include benefits for citizens. In particular, it is proposed to exempt from personal income tax the one-time compensation payment for participants in the Zemsky Trainer [Rural Trainer] programme.
Furthermore, for the sake of consistency, it is proposed that personal income in the form of interest on bank deposits should be taxed solely under personal income tax, excluding such income when determining the tax base for individual entrepreneurs applying special tax regimes, such as the unified agricultural tax, simplified taxation system, or automated simplified taxation system. It is also proposed to introduce a transport tax benefit for Heroes of Russia.
The amendments further account for the exemption of individuals from paying land and property taxes on assets located in territories where a state of emergency or counter-terrorism operation regime has been introduced and where residents have been temporarily resettled. It is proposed that this measure apply retroactively from 2024.
The block of tax amendments also provides for improvements in the field of international taxation. It is proposed to extend the validity of certain rules that mitigate the consequences for businesses arising from the suspension of double taxation agreements.
Mr Mishstin, colleagues,
These amendments also provide for changes in a number of other provisions of tax and budget legislation.
I ask you to support them.
Mikhail Mishustin: Thank you, Mr Siluanov. Colleagues, the second reading is a very important stage in the passage of the budget. It is essential to maintain active interaction with parliamentarians and with the initiators of the amendments, clearly explaining our position. Our goal is to achieve the maximum possible stimulation of economic and social development under current complicated conditions, while certainly maintaining a balanced budget. I would like to ask deputy prime ministers and ministers to keep this matter under personal control, particularly in relation to the chief budget administrators and federal executive authorities.
