A family-run bakery in Korolyov, a science satellite town 20 miles northeast of Moscow, says a surprise jump in its annual property tax bill from 32,000 rubles to more than 1.1 million rubles (about $12,000) could force it to close, according to owners and local accountants familiar with the case.
The increase—roughly 3,500 percent—follows a regional reassessment that indexed business-property values to wartime budget needs, municipal officials said. The bakery’s co-owner, Olga S., told SourceRated the new invoice arrived in February with payment due by May. “We survived pandemic lockdowns and ingredient shortages, but this bill is larger than our entire 2025 profit,” she said.
Russia’s Finance Ministry has denied ordering blanket tax jumps, saying rates are set at the municipal level. Still, economists note that federal transfers to cities have shrunk as defense spending climbs toward a projected 40 percent of total outlays this year. “Local governments are scrambling for revenue,” said Anton Silayev, a senior analyst at the Center for Macroeconomic Analysis in Moscow. “Small firms are the easiest target because they lack bargaining power.”
Official data show nearly 600,000 small and medium-sized enterprises shuttered nationwide in 2025, the steepest single-year drop since the 1990s. While Western sanctions have depressed imports, they also removed many foreign competitors, creating mixed fortunes for domestic producers. Yet higher payroll taxes, mandatory wartime levies and the sliding ruble have eaten into thin margins, business associations say.
Regional officials in the Moscow Oblast contend that only properties reclassified as “commercial prime” faced steep hikes. “The bakery expanded retail space without updating documentation; the new rate merely reflects market value,” a spokesperson said. Lawyers representing several small exporters dispute that claim, calling the reclassification opaque.
Analysts warn the Korolyov case may preview a wider reckoning. “If thousands of mom-and-pop shops shut, urban employment and food security will suffer,” said Maria Goncharova of the independent think tank Onezh. The Kremlin has signaled no large-scale relief, but a Finance Ministry adviser told SourceRated that a limited deferment program is “under discussion.”
For now, the bakery is crowd-funding to pay the bill while exploring relocation to a neighboring region with lower rates. Whether that lifeline arrives could indicate how resilient Russia’s small-business sector remains as the war in Ukraine nears its fifth year.