Nearly half of Russian companies do not plan to pay employees annual bonuses for 2026, a survey showed, as businesses face financial pressure from rising taxes, high borrowing costs and weak demand.
The survey of 1,076 organizations across Russia, conducted by accounting service Aktion Bukhgalteriya and reported by Forbes, found that 46.9% did not intend to pay year-end bonuses. Another 20.4% had postponed a decision indefinitely, while 10.4% planned to reward only some employees.
Just 22.3% said they would definitely pay bonuses to all staff.
The findings point to growing pressure on employee compensation as companies contend with higher operating costs and customers increasingly fall behind on payments, business experts said.
Annual financial results were the main factor determining bonus decisions for 56.9% of respondents. Another 23% said the decision rested with the owner or parent company, while 8.8% cited the tax burden and social insurance contributions payable on bonuses.
Rising taxes and costs are driving the trend, Yekaterina Avdeyeva, chair of the coordinating council at the Center for Business Protection NGO, told Forbes.
Russia raised its corporate income tax rate from 20% to 25% on Jan. 1, 2025, followed by an increase in value-added tax to 22% in 2026. The annual revenue threshold at which businesses using the simplified tax system must pay VAT was also cut from 60 million rubles ($708,000) to 20 million rubles ($236,000).
Borrowing costs are adding to the strain, with the Central Bank’s key interest rate at 14%.
For many industries, typical profit margins make borrowing at rates of 10% to 15% economically unviable, Avdeyeva said. Bank deposits offering returns of 13% to 19% can generate comparable income without the risks of running a business, she added.
Companies also face weak demand and increasingly late payments from customers and business partners, she said.
The pressure is likely to widen the gap between bonus payments at large and small businesses, Alla Starchenko, a leading expert at Aktion Bukhgalteriya, told Forbes.
Large companies have financial reserves, established performance targets and formal incentive programs that will allow them to keep paying bonuses, she said.
Small businesses, where decisions often depend on a single owner and current revenue, will increasingly forgo bonuses or limit them to a few key employees, Starchenko added.
Further tax increases are now the main risk facing businesses, Avdeyeva said. Forgoing bonuses could become routine as companies try to stay afloat, though the practice could also hurt productivity, she added.
This article was translated with the help of artificial intelligence and was reviewed by a Moscow Times editor before publication. Learn more about our newsroom's AI policy here.
Read this article in Russian at The Moscow Times' Russian service.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
