They Aren’t Paying – and Can’t: Tax Debt in the rf Has Increased by a Third

russian businesses are increasingly having to choose between repaying loans and paying taxes. As of the end of the first quarter of 2026, total debts for tax to the rf’s budget system reached $52.3 billion (3.9 trillion rubles), having increased by 34.4% compared to the same period last year. The increase amounted to $13.4 billion over the year.

The largest arrears are in VAT: $8.7 billion. Next are income tax and insurance contributions, at $3.9 billion each. These are sectors where companies’ financial health is most dependent on access to credit, stability of domestic demand, and working capital.

The geographic distribution of debts mirrors the economic map of the rf. moscow accounts for $20.1 billion in debts – nearly 40% of the total. moscow region accounts for $3.8 billion, st. petersburg – for $2.7 billion, and the krasnodar territory and samara region – for $1.1–1.2 billion each.

Wage arrears are a separate concern. As of early June 2026, unpaid wages totaled 2.96 billion rubles, which is by 78.1% more than a year earlier. Most of this amount consists of arrears that arose in 2026.

The rf’s federal budget, however, is not helping the situation. From January through May 2026, revenues rose by only 0.3% – to $197.7 billion – while expenditures jumped by 17%, to $278.1 billion. The only stable source of revenue for the treasury is VAT: its revenue over the five-month period totaled $89.7 billion, a 21.9% increase.

The kremlin will be tempted to respond by increasing fiscal pressure – through stricter administration, siphoning resources from profitable sectors, and targeted pressure on large taxpayers. But this logic leads to a dead end: in response, businesses cut back on investment, push employment into the shadow, and accumulate debts to their counterparties.