Russia's Proposed 2027 Tax Amendments: Key Implications for Business Owners

On 30 September 2026, the Government of the Russian Federation submitted Draft Federal Law No. 617-9, 'On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation', to the State Duma. The draft law was introduced pursuant to Government Order No. 2708-r. It was prepared by the Russian Ministry of Finance as part of the budget package for 2027 and the 2028–2029 planning period.

Three sets of proposed changes are particularly relevant to business owners: taxation of disposals of equity interests, corporate profits tax applicable to closed-end mutual funds, and the tax rate applicable to personal funds. All three concern investment income and are proposed to take effect on 1 January 2027. The Ministry of Finance explains that their common objective is to make tax rates dependent on the amount of income, regardless of its nature.

The draft law comes against a backdrop of rapid growth in the number of funds. According to Bank of Russia data presented by the Federal Tax Service (FTS) at a meeting of its Expert Council on 8 September 2026, 3,193 closed-end mutual funds were operating in Russia at the end of 2025. Their number had increased by 87% over three years. The net asset value of closed-end mutual funds reached RUB 17.8 trillion. Over the same period, the number of personal funds rose from four to 557.

Sales of Equity Interests: General Progressive Personal Income Tax Rates of up to 22%

At present, income from the disposal of equity interests and other property is taxed as a separate tax base at two rates: 13% on income of up to RUB 2.4 million and 15% on the amount exceeding that threshold.

The draft law proposes to consolidate most types of an individual's income into a single aggregate of tax bases (proposed revised Article 210(2.1) of the Russian Tax Code). This would include employment income, dividends, interest on bank deposits, income from securities transactions, proceeds from disposals of property, and disposals of equity interests. A five-tier progressive scale would apply to the aggregate: 13% on income up to RUB 2.4 million, 15% on the portion up to RUB 5 million, 18% on the portion up to RUB 20 million, 20% on the portion up to RUB 50 million, and 22% on the excess. Each rate would apply only to the relevant bracket of the tax base.

Consider a business owner who established a limited liability company (OOO) with charter capital of RUB 10,000 and sells an equity interest for RUB 5.5 million. There are no other documented costs, and no exemption applies. Under the current rules, the personal income tax would amount to RUB 825,000. Under the proposed rules, the illustrative tax amount is stated as 18%, or RUB 990,000, a difference of RUB 165,000. The actual amount depends on the consideration received, substantiated costs, eligibility for an exemption and the owner's other income in the same tax year.

For a major transaction, the top marginal rate would rise to 22%. Sellers would need to recalculate their net after-tax proceeds. This could affect the purchase price, timing and settlement arrangements under the transaction.

Closed-End Funds for Qualified Investors: Taxation at Fund Level

At present, a mutual investment fund is not itself subject to corporate profits tax. Tax arises at unit-holder level when income is distributed or units are redeemed or sold. This allows fund income to be reinvested without an intervening tax charge.

The draft law would make closed-end and interval mutual investment funds whose units are intended for qualified investors liable to corporate profits tax (proposed sixth paragraph of Article 246(1) and new Article 247(5) of the Russian Tax Code). The tax would apply to passive income received by a fund, including dividends, interest, royalties, rental and leasing income, and income from derivative financial instruments. The proposed rate is 15% (new Article 284(1.21) of the Russian Tax Code). Tax would be assessed on gross income; the wording of the proposed provision does not allow deductions for fund expenses, including management company fees.

The fund's management company would be required to calculate, withhold and remit the tax on the fund's behalf (new Article 276.1 of the Russian Tax Code). Payment would be due no later than the 28th day of the month following the month in which the income is received (new Article 287(7) of the Russian Tax Code).

A credit for tax paid by the fund is envisaged for unit holders (Article 276.1(2) and Article 214.1(13.6) of the Russian Tax Code). A unit holder could claim the credit only to the extent of distributions made during the relevant period and only in respect of the share of the fund's taxable income attributable to that holder. According to expert assessments, the credit would apply to interim distributions on units. No credit is provided upon the sale or redemption of units. The credit mechanism is established for corporate profits tax and personal income tax. The draft contains no equivalent mechanism for a unit holder applying the simplified taxation system, including a personal fund taxed under that system.

The tax deferral regime for income of closed-end mutual funds is primarily intended to encourage the reinvestment of income in fund assets. That objective is not served where a closed-end fund is used to accumulate income without subsequently reinvesting it or distributing it to unit holders, or to extract funds through arrangements designed to avoid taxation.

Using Closed-End Funds in Business Sales

Business owners often consider using a closed-end mutual fund as a vehicle for selling a business. The 15% rate may create the impression that this approach would preserve a tax advantage.

As a general rule, the 15% rate applies to taxation at fund level and concerns passive income. Proceeds received by the fund from selling equity interests or shares are not expressly included in the listed categories. While the proceeds remain in the fund and are reinvested, the tax deferral remains available. If the proceeds are invested in deposits or bonds, the interest would be taxed within the fund at 15% each month.

When funds reach the business owner through distributions on units or redemption proceeds, that income would be included in the aggregate personal income tax base, subject to progressive rates of up to 22%. As recently as 8 September 2026, the minutes of the FTS Expert Council stated that distributions on fund units were taxed at rates of 13% and 15% and that no increase was contemplated. Three weeks later, however, the draft law proposed extending the general progressive scale to those distributions as well.

Accordingly, the principal advantage of using a closed-end mutual fund in a business sale would be the deferral of tax and the ability to reinvest sale proceeds within the fund. The tax rate applicable when the owner ultimately receives the proceeds would be aligned with that applicable to a direct sale.

Position of the Federal Tax Service

On 8 September 2026, the Expert Council on Large Taxpayer Practices under the Russian FTS considered the topic 'Tax Risks Associated with Closed-End Mutual Funds'. Participants included senior FTS officials, representatives of the Bank of Russia, the National Association of Securities Market Participants (NAUFOR), the Russian Union of Industrialists and Entrepreneurs (RSPP), the Chamber of Commerce and Industry of the Russian Federation, and advisers. The Council approved a Memorandum on Approaches to Assessing Transactions Involving Closed-End Mutual Funds (Minutes No. 2) and established a working group, including in connection with Draft Law No. 617-9.

The Memorandum recognises that the use of a closed-end mutual fund is lawful and does not, in itself, constitute a tax offence. A legitimate business purpose is one that retains its economic rationale irrespective of any tax benefit. Such a purpose should be identified when the fund is established, supported by documentation and genuinely pursued by the management company.

The FTS identified several high-risk structures. The first directly concerns business sales: a 'transit closed-end fund', in which an asset is contributed to the fund and the units are then sold shortly afterwards to a buyer identified before the fund was established. Other high-risk arrangements include contributing an equity interest in a company to a fund without relinquishing control over that company; retaining profits without making distributions to unit holders; extracting business profits by leasing property from the fund; and financing a corporate group through a fund instead of using a loan.

Russian courts have previously upheld the tax authorities' position in disputes of this kind. In the National Reserve Bank case, shares were sold through a fund shortly after their contribution, while the bank retained control over them (Case No. A56-50155/2013). In the Golos.Development case, a developer transferred apartments to a fund at an undervalue, but the apartments were sold by the developer itself (Case No. A76-35948/2022).

According to the Memorandum, potential consequences include additional assessments of corporate profits tax, personal income tax and withholding tax, as well as recharacterisation of the fund's income as income of the controlling person. The Memorandum also identifies indicators of bona fide conduct: a substantiated business purpose, independent decision-making by the management company, an independent fund infrastructure, arm's-length transaction terms, and regular taxable distributions of income.

Assessment. Fund income would be reduced by tax at the time it is received, leaving less capital available for reinvestment. Structures involving unit holders subject to the simplified taxation system may face taxation of the same income twice. The use of a closed-end mutual fund for a business sale would require a substantiated business purpose and a calculation of the total tax burden when funds are ultimately paid to the owner.

Personal Funds: Special Tax Rate of 22%

Currently, a personal fund may apply a reduced corporate profits tax rate of 15% if more than 90% of its income falls within a prescribed closed list of income categories (Article 284.12 of the Russian Tax Code). If that condition is not met, the standard rate of 25% applies.

The draft law would increase the special rate to 22% (Article 284(1.18) of the Russian Tax Code). The federal component would rise from 2% to 9%, while the regional component would remain at 13%. The tax rate on dividends received by a personal fund from Russian companies would likewise increase to 22% (Article 284(3)(1.4) of the Russian Tax Code). The requirement that at least 90% of income be passive income would remain. The relevant list would be expanded to include gains from disposals of debt securities and debt-based digital financial assets. In materials prepared for the 8 September meeting, the FTS identified the omission of bonds from the list as a regulatory gap. The draft law addresses that gap.

With the standard corporate profits tax rate standing at 25%, an increase in the special rate from 15% to 22% would substantially diminish its attractiveness. For a fund holding a family business, the tax on dividends would increase from 15% to 22%, reducing the tax advantage. Nevertheless, personal funds would remain relevant as instruments for succession planning and family asset management.

Legislative Status

On 1 October 2026, the Council of the State Duma designated the Committee on Budget and Taxes as the responsible committee. Comments and proposals were accepted until 15 October 2026. The first reading is scheduled for 29 October 2026.

Under the draft law, the principal amendments would enter into force one month after official publication, but no earlier than 1 January 2027. The draft law has not been enacted. Its provisions may change before the second reading.

We will continue to monitor consideration of the draft law and the work of the FTS working group, and will report on further developments. If you are planning a business sale, using a closed-end mutual fund or operating a personal fund, we would be pleased to assess the implications of the proposed amendments for your structure.