Business death rate in Russia exceeds birth rate, Ukrainian intelligence reports

As of 1 September 2025, only 3.17 million companies were listed in Russia's Unified State Register of Legal Entities, down from 3.29 million in 2023.

Source: Foreign Intelligence Service of Ukraine

Quote: "The reasons for this are the high key rate set by the central bank, which remained at 21% per annum for six months, and the tightening of tax control."

Details: In 2024, the Russian tax service liquidated 100,000 legal entities, compared with 172,000 in 2023 and over 214,000 in 2022. Rather than stabilising the market, these measures are leading to reduced competition, job losses and less innovation.

Ukrainian intelligence reports that in the first half of 2025, the business death rate in Russia exceeded the birth rate – by almost one and a half times – for the first time since 2022, when companies left the market en masse after sanctions were introduced.

Companies in retail, construction and industry have been worst hit.

Quote: "Despite a slight reduction in the key rate to 17%, business in the Russian Federation continues to decline. Russia’s economy continues to sink into a prolonged crisis that is affecting key industries and depriving small and medium-sized businesses of opportunities for development."

Background:

• Ukraine’s Foreign Intelligence Service reported that Russia has trapped itself by boosting defence spending and turning its defence industrial base into the main driver of domestic demand.
• The Russian Ministry of Finance has announced a new measure aimed at protecting the state budget from oil price fluctuations and Western sanctions affecting Russian energy exports: tax hikes.
• The Russian government is considering raising the rate of value-added tax (VAT) to reduce the budget deficit and maintain reserves.
• Russia’s economy faces more serious problems than is officially acknowledged, with a real risk of a systemic banking crisis over the next year.

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