Russian Duma approves sweeping tax reforms amidst war funding

The Russian State Duma has adopted a draft law to change the tax system, reports the daily Kommersant. Those earning over 2.4 million rubles annually, which at the current exchange rate is approximately £19,000, will contribute to additional budget revenues.

The Kremlin had announced tax hikes even before the "presidential elections" that took place in the first half of the year. The State Duma (equivalent to the House of Commons) adopted the law on Tuesday, 9 July, according to "Kommersant".

Currently, in Russia, there are two rates for individuals - up to 5 million rubles annually at 13% and 15% above that threshold. The law introduces more tiers.

"For income from 2.4 million to 5 million rubles annually, the rate will increase to 15%, from 5 million to 20 million rubles - to 18%, from 20 million to 50 million rubles - to 20%, over 50 million rubles - to 22%. The rate for citizens with incomes below 2.4 million rubles annually will remain 13%. Companies, on the other hand, will pay a tax of 25%, instead of 20%." states the Russian daily.

As Bloomberg calculated in March, Russia aims to collect 4 trillion rubles in higher taxes, which amounts to about £33 billion. The money is intended to finance the armed aggression against Ukraine.

- If we talk about the goals of the tax changes, there are several. This includes generating additional income to finance current priorities and new support measures - said Andrei Makarov, Chairman of the State Duma's Budget and Taxes Committee, to "Kommersant".

The daily points out that theoretically, these taxes will affect 3% of Russians, but in practice, everyone will feel the consequences, as companies will raise product prices. - We still have a market economy, and prices are regulated by supply and demand - concluded Makarov.