What Is AUSN? Advantages, Limitations, and Hidden Risks of Russia’s Automated Simplified Tax System

Automated Simplified Taxation System (AUSN) is a pilot tax regime for small businesses in Russia designed to cut administrative work—eliminating the need to file tax returns or manually calculate monthly tax payments. Instead, the Federal Tax Service (FTS) calculates tax automatically using data from online cash registers, authorized banks, and the taxpayer’s personal account.

Taxpayers don’t prepare declarations or compute monthly payments themselves—but they must verify data transmitted by banks and cash registers, correctly classify transactions, and enter missing information into their personal taxpayer account on time.

AUSN operates under Federal Law No. 17-FZ dated 25 February 2022. It applies only in Russian regions that have adopted a local law enabling it. The pilot runs until 31 December 2027.

• Who qualifies for AUSN—and how is tax calculated?
• Why do businesses choose AUSN?
• Pros and cons of AUSN
• Hidden risks and pitfalls
• Who should adopt AUSN—and who should avoid it?
• How to switch to AUSN

Who qualifies for AUSN—and how is tax calculated?

Individual entrepreneurs (IEs) and legal entities may apply for AUSN if they meet all statutory eligibility criteria simultaneously.

When calculating employee headcount, IEs exclude themselves—so an entrepreneur may work personally and hire up to five staff members. There is no limit on the number of accounts at authorized banks, but opening business accounts at non-authorized banks is prohibited. A personal current account used solely for private purposes may be held at any bank.

Not all taxpayers are eligible. Article 3 of Law No. 17-FZ explicitly excludes banks, insurance companies, microfinance organizations, pawnshops, non-state pension funds, professional securities market participants, non-commercial organizations, peasant (farmer) households, and entities with separate subdivisions. Always verify full eligibility directly against the law before applying.

AUSN offers two taxable objects:

• “Income” object: Tax is levied at 8% of recognized income. Expenses do not reduce the tax base.
• “Income minus expenses” object: Tax is levied at 20% on the difference between recognized income and allowable expenses. If the resulting amount is less than 3% of income—or if a loss occurs—the minimum tax due is 3% of income. The chosen object can be changed only at the start of the next calendar year, with notification to the tax authority by 31 December.

The tax period is the calendar month. By the 7th of the following month, taxpayers must review and correct transaction categorization performed by their bank. By the 15th, the FTS issues the calculated tax amount; payment is due by the 25th.

Why do businesses choose AUSN?

The primary driver is reduced administrative burden. Tax calculation is fully automated—no manual tax base formation or declaration filing is required.

AUSN taxpayers are exempt from submitting: USN tax returns, insurance contribution reports (Form RSV), Form 6-NDFL, employee income statements, and the Book of Income and Expense Records (KUDiR). However, some reporting remains mandatory—for example, Form EFS-1 (on employment and insurance seniority) when staff are employed. A VAT return is also required if the taxpayer acted as a VAT agent or issued an invoice with separately stated VAT.

Another key benefit is zero rates for core social insurance contributions. IEs on AUSN pay no fixed contributions for themselves. Employers—both IEs and legal entities—do not accrue standard-rate pension, medical, or social insurance contributions for employees.

Employees’ pension and social rights remain intact: the Social Fund receives budgetary compensation for these contributions. Employers still pay the fixed occupational accident and occupational disease insurance contribution—RUB 2,959 annually in 2026, paid monthly in equal installments (1/12).

An authorized bank acts as a partial NDFL agent. Before each salary payment, the employer must provide the bank with employee details, taxable/non-taxable income amounts, and applicable standard or professional tax deductions. The bank then calculates, withholds, and remits NDFL. This automation does not relieve employers of responsibility for providing accurate source data.

Under AUSN, taxpayers generally do not charge or pay VAT, except in cases where they act as VAT agents, import goods, or issue invoices with separately stated VAT.

Pros and cons of AUSN

The main advantage is significantly reduced ongoing accounting and tax compliance workload. The FTS calculates tax automatically; no AUSN-specific declaration is filed; KUDiR is not maintained; and most payroll-related tax operations flow through the bank.

Savings on insurance contributions can be substantial for businesses with employees. For IEs, eliminating fixed contributions lowers mandatory costs regardless of profitability.

However, AUSN tax rates are higher than standard USN rates: instead of 6% on income, the rate is 8%; instead of 15% on income minus expenses, it is 20%. Regional authorities cannot set lower AUSN rates—so entrepreneurs benefiting from regional USN rate reductions may face higher overall tax burdens after switching.

Tax is payable monthly, unlike quarterly advance payments under standard USN—requiring stricter cash flow planning.

A strict five-employee cap is a major limitation. Hiring a sixth person immediately disqualifies the taxpayer. AUSN is also unsuitable for businesses planning rapid team expansion or approaching the RUB 60 million annual revenue threshold.

Business operations become dependent on seamless data exchange among cash registers, banks, and the FTS. Mislabeling a payment (e.g., marking a loan repayment as revenue) directly distorts the tax base. Automation reduces manual work—but regular transaction verification remains essential.

Hidden risks and pitfalls

• Bank transaction classification errors: By the 7th of each month, taxpayers must verify whether the bank correctly categorized operations as income, expense, or non-taxable. For example, misclassifying a loan repayment as revenue inflates the tax base. Corrections must be made before tax calculation.
• “Income minus expenses” object limitations: Not every bank withdrawal automatically qualifies as a deductible expense. It must meet statutory requirements, be substantiated, and supported by documentation. The law also lists specific non-deductible expenditures.
• NDFL responsibilities remain with the employer: Although the bank calculates and withholds NDFL, the employer remains the legal tax agent. They must submit timely, accurate data on payments and deductions. Banks do not process social or property tax deductions for employees. Per FTS guidelines, banks apply the 13% NDFL rate; if income exceeds statutory thresholds, the tax authority independently calculates additional liability using the progressive scale.
• Loss of AUSN eligibility triggers immediate exit: Breaching any condition—exceeding revenue or employee limits, opening a business account at a non-authorized bank, or any other violation—causes automatic loss of AUSN status effective the 1st of the month in which the breach occurred. Notification to the FTS is required by the 15th of the following month. Taxpayers may simultaneously notify the FTS of their intent to switch to USN or the Unified Agricultural Tax (ESKhN); otherwise, they default to the general tax system.
• No early voluntary exit: Once voluntarily adopted, AUSN must be applied for at least 12 consecutive calendar months. Early transition to another regime is permitted only upon involuntary loss of eligibility—not at the taxpayer’s discretion.
• AUSN does not eliminate all reporting or replace the need for accounting support: Payroll, Social Fund reporting, statistical forms, VAT agent declarations, and tracking of non-automated operations (e.g., cash receipts or non-bank settlements) still require attention.

Who should adopt AUSN—and who should avoid it?

AUSN may suit solo IEs seeking relief from fixed insurance contributions and tax return filing. But savings must be weighed against the tax rate increase—from 6% to 8%—which may outweigh contribution savings in some cases.

It can also benefit small teams with several employees: the higher the payroll, the greater the potential savings from zero-rate pension and medical contributions.

Ideal AUSN candidates are micro-enterprises with transparent non-cash operations, online cash registers, one or more accounts at authorized banks, and stable staffing of up to five people.

AUSN is less suitable for businesses with high, hard-to-document expenses—or those likely to misclassify them in the automated system. Under the “income minus expenses” object, such errors directly inflate tax liability.

AUSN is unlikely to fit businesses planning to hire more than five staff, nearing RUB 60 million in annual revenue, benefiting from regional USN rate discounts, or operating in sectors explicitly barred by law (e.g., banking, insurance, microfinance, or securities trading).

How to switch to AUSN

New IEs or legal entities may submit a notification of adoption no later than 30 calendar days after registration with the tax authority. Notifications are submitted via the taxpayer’s personal account or an authorized bank.

Existing businesses transitioning from the general tax system or another regime must notify the FTS no later than 31 December of the year preceding the intended switch.

Starting 1 January 2025, taxpayers currently using USN or the Professional Income Tax (NPD) may switch to AUSN on the 1st of any month—provided notification is submitted no later than the last day of the prior month. When assessing eligibility, all income earned since the beginning of the year—including pre-AUSN periods—is counted toward the RUB 60 million limit.

Before submitting notification, verify the following:

1. Whether AUSN has been introduced in your region of registration.
2. That your business meets all conditions specified in Article 3 of Law No. 17-FZ.
3. That all business accounts are held exclusively at authorized banks.
4. The estimated tax liability under both AUSN objects (“income” and “income minus expenses”).
5. A comparison with your current regime—including insurance contributions and VAT implications.
6. The likelihood of exceeding employee or revenue limits during the coming year.
7. Which expenses would qualify for deduction under the “income minus expenses” object.

FAQ

Who is eligible for AUSN?

Individual entrepreneurs and legal entities with ≤5 employees, ≤RUB 60M annual revenue (≤RUB 150M fixed assets for companies), accounts only at FTS-authorized banks, and no prohibited activities (e.g., banking or insurance).

Does AUSN eliminate all tax reporting?

No. While USN returns, KUDiR, and payroll reports like 6-NDFL are waived, employers still file EFS-1 for staff, VAT returns if acting as agent, and occupational accident insurance contributions.

Can I switch to AUSN mid-year—and leave early if it doesn’t suit me?

Yes, starting 2025, USN/NPD taxpayers may join AUSN on the 1st of any month (notify by month-end). But once joined, you must use AUSN for at least 12 months—unless disqualified by breaching limits.