diff --git a/pkg/core/helper_test.go b/pkg/core/helper_test.go
index 4f0f2f566..e91c28db3 100644
--- a/pkg/core/helper_test.go
+++ b/pkg/core/helper_test.go
@@ -28,6 +28,7 @@ import (
 	"github.com/nspcc-dev/neo-go/pkg/core/storage"
 	"github.com/nspcc-dev/neo-go/pkg/core/transaction"
 	"github.com/nspcc-dev/neo-go/pkg/crypto/keys"
+	"github.com/nspcc-dev/neo-go/pkg/encoding/address"
 	"github.com/nspcc-dev/neo-go/pkg/encoding/fixedn"
 	"github.com/nspcc-dev/neo-go/pkg/io"
 	"github.com/nspcc-dev/neo-go/pkg/smartcontract"
@@ -395,6 +396,7 @@ func initBasicChain(t *testing.T, bc *Blockchain) {
 		},
 	}
 	require.NoError(t, addNetworkFee(bc, transferTx, acc0))
+	transferTx.SystemFee += 1000000
 	require.NoError(t, acc0.SignTx(testchain.Network(), transferTx))
 
 	b = bc.newBlock(initTx, transferTx)
@@ -415,6 +417,7 @@ func initBasicChain(t *testing.T, bc *Blockchain) {
 		},
 	}
 	require.NoError(t, addNetworkFee(bc, transferTx, acc0))
+	transferTx.SystemFee += 1000000
 	require.NoError(t, acc0.SignTx(testchain.Network(), transferTx))
 
 	b = bc.newBlock(transferTx)
@@ -603,14 +606,20 @@ func prepareContractMethodInvokeGeneric(chain *Blockchain, sysfee int64,
 func signTxWithAccounts(chain *Blockchain, tx *transaction.Transaction, accs ...*wallet.Account) {
 	scope := transaction.CalledByEntry
 	for _, acc := range accs {
+		accH, _ := address.StringToUint160(acc.Address)
 		tx.Signers = append(tx.Signers, transaction.Signer{
-			Account: acc.PrivateKey().GetScriptHash(),
+			Account: accH,
 			Scopes:  scope,
 		})
 		scope = transaction.Global
 	}
 	size := io.GetVarSize(tx)
 	for _, acc := range accs {
+		if acc.Contract.Deployed {
+			// don't need precise calculation for tests
+			tx.NetworkFee += 1000_0000
+			continue
+		}
 		netFee, sizeDelta := fee.Calculate(chain.GetBaseExecFee(), acc.Contract.Script)
 		size += sizeDelta
 		tx.NetworkFee += netFee
diff --git a/pkg/core/native/native_neo.go b/pkg/core/native/native_neo.go
index f56914eab..133870c54 100644
--- a/pkg/core/native/native_neo.go
+++ b/pkg/core/native/native_neo.go
@@ -442,6 +442,15 @@ func (n *NEO) distributeGas(ic *interop.Context, h util.Uint160, acc *state.NEOB
 		return err
 	}
 	acc.BalanceHeight = ic.Block.Index
+
+	// Must store acc before GAS distribution to fix acc's BalanceHeight value in the storage for
+	// further acc's queries from `onNEP17Payment` if so, see https://github.com/nspcc-dev/neo-go/pull/2181.
+	key := makeAccountKey(h)
+	err = ic.DAO.PutStorageItem(n.ID, key, acc.Bytes())
+	if err != nil {
+		return fmt.Errorf("failed to store acc before gas distribution: %w", err)
+	}
+
 	n.GAS.mint(ic, h, gen, true)
 	return nil
 }
diff --git a/pkg/core/native_neo_test.go b/pkg/core/native_neo_test.go
index 089543113..4d2fbf2f1 100644
--- a/pkg/core/native_neo_test.go
+++ b/pkg/core/native_neo_test.go
@@ -195,6 +195,39 @@ func TestNEO_Vote(t *testing.T) {
 	}
 }
 
+// TestNEO_RecursiveDistribution is a test for https://github.com/nspcc-dev/neo-go/pull/2181.
+func TestNEO_RecursiveGASMint(t *testing.T) {
+	bc := newTestChain(t)
+	initBasicChain(t, bc)
+
+	contractHash, err := bc.GetContractScriptHash(1) // deployed rpc/server/testdata/test_contract.go contract
+	require.NoError(t, err)
+	tx := transferTokenFromMultisigAccount(t, bc, contractHash, bc.contracts.GAS.Hash, 2_0000_0000)
+	checkTxHalt(t, bc, tx.Hash())
+
+	// Transfer 10 NEO to test contract, the contract should earn some GAS by owning this NEO.
+	tx = transferTokenFromMultisigAccount(t, bc, contractHash, bc.contracts.NEO.Hash, 10)
+	res, err := bc.GetAppExecResults(tx.Hash(), trigger.Application)
+	require.NoError(t, err)
+	require.Equal(t, vm.HaltState, res[0].VMState)
+
+	// Add blocks to be able to trigger NEO transfer from contract address to owner
+	// address inside onNEP17Payment (the contract starts NEO transfers from chain height = 100).
+	for i := bc.BlockHeight(); i < 100; i++ {
+		require.NoError(t, bc.AddBlock(bc.newBlock()))
+	}
+
+	// Transfer 1 more NEO to the contract. Transfer will trigger onNEP17Payment. OnNEP17Payment will
+	// trigger transfer of 11 NEO to the contract owner (based on the contract code). 11 NEO Transfer will
+	// trigger GAS distribution. GAS transfer will trigger OnNEP17Payment one more time. The recursion
+	// shouldn't occur here, because contract's balance LastUpdated height has already been updated in
+	// this block.
+	tx = transferTokenFromMultisigAccount(t, bc, contractHash, bc.contracts.NEO.Hash, 1)
+	res, err = bc.GetAppExecResults(tx.Hash(), trigger.Application)
+	require.NoError(t, err)
+	require.Equal(t, vm.HaltState, res[0].VMState, res[0].FaultException)
+}
+
 func TestNEO_SetGasPerBlock(t *testing.T) {
 	bc := newTestChain(t)
 
diff --git a/pkg/rpc/server/server_test.go b/pkg/rpc/server/server_test.go
index 30c58984f..76ca0e202 100644
--- a/pkg/rpc/server/server_test.go
+++ b/pkg/rpc/server/server_test.go
@@ -54,8 +54,8 @@ type rpcTestCase struct {
 	check  func(t *testing.T, e *executor, result interface{})
 }
 
-const testContractHash = "bb6a679438ce0fc6cb0ed1aa85ce83cf96cd3aeb"
-const deploymentTxHash = "4c631654b04f6a3b25af45082d260b555de4d0eeba6b7697e3a0f18b3f96434f"
+const testContractHash = "5c9e40a12055c6b9e3f72271c9779958c842135d"
+const deploymentTxHash = "fefc10d2f7e323282cb50838174b68979b1794c1e5131f2b4737acbc5dde5932"
 const genesisBlockHash = "0f8fb4e17d2ab9f3097af75ca7fd16064160fb8043db94909e00dd4e257b9dc4"
 
 const verifyContractHash = "f68822e4ecd93de334bdf1f7c409eda3431bcbd0"
@@ -1650,7 +1650,7 @@ func checkNep17Balances(t *testing.T, e *executor, acc interface{}) {
 			},
 			{
 				Asset:       e.chain.UtilityTokenHash(),
-				Amount:      "57900879260",
+				Amount:      "57898138260",
 				LastUpdated: 15,
 			}},
 		Address: testchain.PrivateKeyByID(0).GetScriptHash().StringLE(),
diff --git a/pkg/rpc/server/testdata/test_contract.go b/pkg/rpc/server/testdata/test_contract.go
index 01e6a63f4..11f9f9a46 100644
--- a/pkg/rpc/server/testdata/test_contract.go
+++ b/pkg/rpc/server/testdata/test_contract.go
@@ -3,9 +3,12 @@ package testdata
 import (
 	"github.com/nspcc-dev/neo-go/pkg/interop"
 	"github.com/nspcc-dev/neo-go/pkg/interop/contract"
+	"github.com/nspcc-dev/neo-go/pkg/interop/native/ledger"
 	"github.com/nspcc-dev/neo-go/pkg/interop/native/management"
+	"github.com/nspcc-dev/neo-go/pkg/interop/native/neo"
 	"github.com/nspcc-dev/neo-go/pkg/interop/runtime"
 	"github.com/nspcc-dev/neo-go/pkg/interop/storage"
+	"github.com/nspcc-dev/neo-go/pkg/interop/util"
 )
 
 const (
@@ -13,6 +16,8 @@ const (
 	decimals    = 2
 )
 
+var owner = util.FromAddress("NbrUYaZgyhSkNoRo9ugRyEMdUZxrhkNaWB")
+
 func Init() bool {
 	ctx := storage.GetContext()
 	h := runtime.GetExecutingScriptHash()
@@ -22,6 +27,26 @@ func Init() bool {
 	return true
 }
 
+func OnNEP17Payment(from interop.Hash160, amount int, data interface{}) {
+	curr := runtime.GetExecutingScriptHash()
+	balance := neo.BalanceOf(curr)
+	if ledger.CurrentIndex() >= 100 {
+		ok := neo.Transfer(curr, owner, balance, nil)
+		if !ok {
+			panic("owner transfer failed")
+		}
+		ok = neo.Transfer(curr, owner, 0, nil)
+		if !ok {
+			panic("owner transfer failed")
+		}
+	}
+}
+
+// Verify always returns true and is aimed to serve the TestNEO_RecursiveGASMint.
+func Verify() bool {
+	return true
+}
+
 func Transfer(from, to interop.Hash160, amount int, data interface{}) bool {
 	ctx := storage.GetContext()
 	if len(from) != 20 {
diff --git a/pkg/rpc/server/testdata/test_contract.yml b/pkg/rpc/server/testdata/test_contract.yml
index 2761f0c7e..e0a5ce927 100644
--- a/pkg/rpc/server/testdata/test_contract.yml
+++ b/pkg/rpc/server/testdata/test_contract.yml
@@ -11,4 +11,6 @@ events:
       - name: amount
         type: Integer
 permissions:
+  - hash: ef4073a0f2b305a38ec4050e4d3d28bc40ea63f5
+    methods: ["transfer"]
   - methods: ["onNEP17Payment"]
\ No newline at end of file
diff --git a/pkg/rpc/server/testdata/testblocks.acc b/pkg/rpc/server/testdata/testblocks.acc
index 155622bac..0f48ffd78 100644
Binary files a/pkg/rpc/server/testdata/testblocks.acc and b/pkg/rpc/server/testdata/testblocks.acc differ