“Significant drop in consumer demand”: Russian business is massively going “into the shadows” due to changes in taxation

In October 2025, the revenue of Russian companies and individual entrepreneurs decreased to $82.5 billion, which is 21.3% lower than a month earlier. Against the background of falling purchasing power, the shadow sector in the country is growing rapidly.

This was reported by the press service of the Foreign Intelligence Service of Ukraine.

In October, legal entities lost about $17.2 billion in revenue. Individual entrepreneurs lost $4.8 billion during this period. The total number of cashier’s checks decreased by 22.4%, indicating a significant decline in business activity.

The main reasons for the decline were reduced consumer demand and business evasion from official accounting. In physical terms, sales of basic food products in September-October decreased by 5% compared to 2024. In particular, sales of milk fell by 8%, buckwheat by 9%, and rice by 10%.

Consumer behavior is being pressured by inflation, tariff increases, and uncertainty about future incomes. This exacerbates the overall decline in demand and the velocity of money.

At the same time, more and more entrepreneurs are avoiding registering transactions in cash registers. This is due to the Russian government’s plans to reduce the income threshold for the simplified taxation system from $738.6 thousand to $123.1 thousand per year from January 1, 2026. The introduction of new regulations aimed at increasing tax revenues actually stimulates the transition of business into the shadows.

The drop in revenue by more than 20% per month reflects the slowdown in monetary circulation and the decline in the purchasing power of the population. According to estimates, the share of the shadow sector may increase by 10–15% by mid-2026.

By the way, the non-food retail sector in Russia continues to collapse .

Let us recall that the European Commission officially approved a new, 19th package of sanctions against the Russian Federation.

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