Cracking down on the shadow economy has become a key goal for the Kremlin. Before the VAT increase came into force, Putin warned that the new rules should not leave companies in the shadows and called for a “radical reduction in illegal employment.”

“One arm of the government is trying to squeeze as much money as possible out of people through higher taxes, fines and other charges,” Alexander Kolyandr, a non-resident senior researcher at the Center for European Policy Analysis, told the BBC.

“But another, in trying to counter so-called terrorist threats, is undermining that strategy by making it difficult to collect taxes,” he said, referring to mobile Internet outages.

The Soviet-era instinct to keep money “under the mattress” is returning despite double-digit yields on bank deposits, which have remained high as the central bank battles stubborn war-fueled inflation.

A one-year fixed deposit of 100,000 rubles (£950; $1,280) at Sberbank, Russia’s largest lender, currently pays 10% interest.

Still, central bank data showed Russians withdrew 550 billion rubles from bank accounts in May, including 200 billion rubles from fixed-term deposits.

Anton, a copywriter who lives in Moscow, said a salesperson at a vinyl store offered him a discount for paying in cash. “He was candid about the reason: higher taxes,” he told the BBC.

When mobile internet outages intensified during increased security around Russia’s Victory Day celebrations in May, he said he saw people struggling to withdraw money to spend at a flower market in central Moscow.

“There was a woman going from ATM to ATM, looking for one that still had bills in it.”