Russia weighs biggest tax shake-up in almost 25 years as Putin scrambles to finance Ukraine war

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As the war in Ukraine drains the Kremlin's coffers, the government is scrambling to find new ways to finance it. After nearly three decades with most Russians paying just 13% in taxes, Vladimir Putin is eyeing a radical shake-up.

Signs of Russia's so-called special military operation are everywhere in Moscow, from roadside recruitment adverts to Z-themed souvenirs. Now there is another example - a proposed tax hike that amounts to the biggest shake-up of the Russian tax system in a quarter of a century. As the war in Ukraine drains the Kremlin's coffers, the government is scrambling to find new ways to finance it.

The move simplified a previously complicated tax regime which few adhered to and it successfully boosted revenues - and his popularity - as a result. A higher rate of 15% was established in 2021 for those earning more than five million roubles . Now the finance ministry wants to lower the threshold for the 15% rate, so it applies to annual incomes from 2.4 to five million roubles, and introduce more bands above.

 

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