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

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As the war in Ukraine continues to drain the Kremlin's coffers, the government is scrambling to find new ways to finance it. Now, after nearly a quarter of a century with most Russians paying just 13% in taxes, Putin is eyeing the biggest tax shake-up in a quarter of a century.

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 continues to drain the Kremlin's coffers, the government is scrambling to find new ways to finance it.

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. Incomes between five and 20 million roubles will be taxed at 18%, those between 20-50 million roubles at 20%, and anything over 50 million roubles at 22%. The proposals will also see corporation tax increase from 20% to 25%. If adopted by the Russian parliament, the changes will come into force next year and generate 2.

 

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