Putin signs off biggest tax shake-up in 25 years – with ‘aim of funding the war in Ukraine’
In a bold move aimed at funding the ongoing war in Ukraine, Russian President Vladimir Putin has signed off on the biggest tax shake-up in the country in 25 years. The new bill, approved by both houses of parliament, introduces a progressive income tax rate and a rise in corporation tax.
The new law keeps the current 13% rate for incomes up to 2.4 million roubles a year, but introduces higher tax rates for higher incomes. Incomes between five and 20 million roubles will be taxed at 18%, those between 20 to 50 million roubles at 20%, and anything over 50 million roubles at 22%. Putin has assured that these increases will only affect a small percentage of Russian taxpayers.
The changes are expected to generate an additional 2.6 trillion roubles in federal revenues in 2025, helping to finance the war in Ukraine and reduce Russia’s reliance on oil exports amidst Western sanctions. This marks a significant departure from Putin’s previous flat tax rate policy introduced in 2001.
Experts believe that this tax reform is a strategic move by the government to shift the economy towards military production. As the war in Ukraine continues to drain the Kremlin’s coffers, the new tax system aims to ensure that Russia has the financial resources needed to sustain its military efforts.
The changes are set to come into effect next year, marking a new chapter in Russia’s tax history and signaling a shift in priorities towards defense spending.
