VAT in the simplified taxation system: analysis of micro and macroeconomic risks for the Russian Federation

The study is devoted to the analysis of the micro and macroeconomic consequences of the introduction of VAT for taxpayers under the simplified taxation system (hereinafter referred to as STS) in the Russian Federation. The subject of the research is the Federal Law of July 12, 2024, No. 176-FZ "On Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation, and on the Recognition of Certain Provisions of Legislative Acts of the Russian Federation as Invalid," as well as the micro and macroeconomic consequences of the tax reform. The goal of the work is to assess the effectiveness of the reform for the development of small and medium-sized enterprises (hereinafter referred to as SMEs), the state economy, and to identify accompanying risks. The methodology of the work is based on scientific methods such as general logical, empirical, and economic modeling methods, which allow for the assessment of the economic consequences of the analyzed tax reform under conditions of limited data. The study also employed deductive analysis based on the results of microeconomic modeling and an analysis of industry risks. The main findings of the study include the following. At the micro level, a significant decrease in profit and profitability was identified, as well as a sharp increase in the overall tax burden for SMEs that became VAT payers. The risks are most pronounced in the B2C segment and in industries with high demand elasticity. At the macro level, the risks identified include a decrease in demand and production, an increase in unemployment, inflationary pressure (especially on goods with low elasticity), a wave of bankruptcies in SMEs, a potential reduction in the share of SMEs in GDP, and the possible formation of a new shadow sector. Moreover, it was concluded that the reform has a pronounced fiscal character, which may undermine its stimulating potential for SMEs. The scientific novelty of the research is expressed in the economic modeling of the consequences of the introduction of VAT without the possibility of tax deductions for business entities applying a special tax regime, which highlighted the significant risks of such a model. Thus, it demonstrated insufficient development of the conclusions of some experts who only point out the positive aspects of such a taxation regime for small businesses. The results of the research are intended for government bodies (development of corrective measures in tax and economic policy) and analytical centers, for which specific tools have been proposed to mitigate the identified risks.

VAT, tax administration, tax reform, small business, economy, tax policy, business fragmentation, taxes, tax risks, economic modeling