Putin signs off biggest tax shake-up in 25 years – with ‘aim of funding the war in Ukraine’

Russian President Vladimir Putin has made a bold move by signing off on the biggest tax overhaul in the country in 25 years, with the aim of funding the ongoing war in Ukraine. The new bill, approved by both houses of parliament, introduces a progressive income tax rate and a rise in corporation tax, departing from Putin’s previous flat rate of 13%.

As the war in Ukraine continues to drain the Kremlin’s coffers, the government is taking drastic measures to find new sources of funding. The new tax law will keep a 13% rate for incomes up to 2.4 million roubles, with higher rates for higher incomes. Incomes over 50 million roubles will be taxed at 22%, while corporation tax will increase from 20% to 25%.

The tax reforms 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 amid Western sanctions. The changes are set to come into effect next year, affecting only a small percentage of Russian taxpayers.

Experts believe that the tax shake-up is a strategic move by the Russian government to shift focus from civilian needs towards military expenditure. This new law marks a significant departure from Putin’s previous tax policies and could have far-reaching implications for the Russian economy.