Russia Prepares New Tax Increases Amid Military Spending
Russia is planning another increase in the tax burden in 2027–2029 amid persistently high defense and security spending. The Russian Ministry of Finance has submitted a three-year budget draft and a package of amendments to the Tax Code to the government.
According to Reuters, citing materials from the Russian Ministry of Finance, the federal budget will remain in deficit throughout all three years—at around 2% of GDP annually. The ministry called defense and security a "strategic priority" of budgetary policy.
The Ministry of Finance explicitly states that the allocated resources must provide the Russian army with weapons and military equipment, finance the modernization of defense-industrial complex enterprises, and payments to military personnel.
One of the most notable changes concerns individuals' investment income. A progressive personal income tax scale with rates from 13% to 22% is proposed to be extended to so-called passive income—dividends, interest on bank deposits, transactions with securities and digital rights, sale of property and shares in companies.
Currently, a significant portion of such income is taxed at rates of 13–15%. According to the Russian Ministry of Finance's estimate, the change will affect about 4 million people, or no more than 6% of the population with taxable income. The authorities promise to preserve the benefit for small bank deposits.
An additional burden is also planned for businesses. For certain mining companies, a tax of 30% on additional income arising from the growth of world prices for solid minerals is proposed. A separate rate of 20% is provided for gold. Reuters notes that the increase will affect, in particular, the metallurgical and raw materials sectors.
Another change concerns cross-border online commerce. Purchases of goods through foreign electronic platforms are proposed to be subject to VAT at a standard rate of 22%. The marketplaces themselves must become tax agents. In addition, the authorities want to establish a customs fee of 100 rubles for foreign parcels for personal use worth up to 200 euros.
For mutual investment funds, it is proposed to introduce a 15% profit tax on passive income. The tax rate on dividends transferred to non-residents to special "C" type accounts is planned to be increased to 35%.
The budget draft provides for Russia's expenditures in 2027 at a level of 48.8 trillion rubles. Finance Minister Anton Siluanov clarified that the deficit next year is expected at 2.2% of GDP, and overall in 2027–2029 it will be kept around the 2% mark.
The current package will be a continuation of the already begun increase in the tax burden. Since 2026, the basic VAT rate in Russia was increased from 20% to 22%. At that time, the Ministry of Finance also linked additional budget revenues primarily with financing defense and security.
Reuters notes that Russia's spending on the war against Ukraine continues to put pressure on public finances simultaneously with an economic slowdown. As a result, the authorities are forced to combine tax increases with expanding borrowing.
The budget package must still pass government review, after which it will be sent to parliament. Thus, the proposed tax changes are not yet finally approved.
