Russia’s beauty industry sees wave of business closures as tax burden grows

Business closures within Russia's beauty services industry surged 52.5% to 12,300 establishments between January and July compared to the same period last year, according to analysis by data firm Kontur.Focus for the Russian business daily Kommersant. Meanwhile, new business registrations in the sector declined 16.1% to 13,000 during the same timeframe.

Igor Stoyanov, founder of the Persona salon chain, attributes the trend to business owners transitioning from the patent tax system to the value-added tax (VAT). The revenue threshold for small businesses using the simplified tax system to start paying VAT has been progressively lowered. Stoyanov claimed this change has increased the tax and administrative burden on small enterprises, leading some owners to shutter their businesses.

Other interviewed business owners told Kommersant that starting a new enterprise has become "almost impossible," and that a salon model that was profitable a year ago no longer "adds up" under the current tax rules. In November 2025, President Vladimir Putin signed a law raising the VAT rate from 20% to 22% and reducing the simplified tax scheme threshold from 60 million rubles.

The threshold is set to decrease further to 20 million rubles in 2026, 15 million rubles in 2027, and 10 million rubles in 2028. In June, Putin announced that further lowering of the revenue threshold for small businesses to start paying VAT would be postponed.