Vladimir Putin has made a bold move by signing off on the biggest tax shake-up in Russia in 25 years, with the aim of funding the ongoing war in Ukraine. The new bill, which includes a progressive income tax rate and a rise in corporation tax, marks a significant departure from Putin’s previous tax policies.
The new law will keep a 13% tax rate for incomes up to 2.4 million roubles a year, but for higher incomes, a steadily higher tax rate will apply. 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 stated that these increases will only affect a small percentage of Russian taxpayers.
In addition to the changes in income tax, corporation tax will also increase from 20% to 25%. These reforms are expected to generate 2.6 trillion roubles in additional federal revenues in 2025, helping to finance the war in Ukraine and reduce Russia’s reliance on oil exports amid Western sanctions.
The new tax laws are seen as a shift towards prioritizing defense spending over social welfare, with experts noting that the government is now more focused on producing “guns” rather than ensuring citizens “eat well.” The changes are set to come into force next year, signaling a significant shift in Russia’s economic policies under Putin’s leadership.