Kremlin's financial strain prompts sweeping tax reforms
For Russians, the year 2025 begins with tax hikes and new fees. Russia has exhausted its financial reserves, which grew from the surge in energy resource prices following the invasion of Ukraine, concludes "Gazeta Wyborcza," summarizing the additional burdens for citizens of Vladimir Putin's Russia.
The Russian leader, Vladimir Putin, after initiating the invasion of Ukraine and subsequently facing a series of sanctions from the West, could initially boast about the significant revenue the country gained due to the rapidly rising energy prices. This was true even though he had to find new customers.
The wartime economic boom for Russia has concluded, however, with the stabilization of prices. "Gazeta Wyborcza" concludes that the growing financial issues for Russia — whose budget relies heavily on energy resources — are proven by the fact that the Kremlin will need to take more from citizens' wallets and Russian companies' accounts this year.
Higher taxes and new fees
One of the changes in Russia's tax system is the shift away from a flat tax rate. A greater number of tax brackets have been introduced.
For an income from 2.4 million to 5 million rubles (CAD 31,000 - 64,000) annually, the rate increased to 15%, from 5 million to 20 million rubles (CAD 31,000 - 257,000) to 18%, from 20 million to 50 million rubles to 20% (CAD 257,000 - 643,000), and over 50 million rubles (CAD 643,000) to 22%. The rate for citizens with incomes below 2.4 million rubles (CAD 31,000) per year remained at 13%.
That's not all. Companies, from the start of the year, are now subject to a tax rate of 25% instead of 20%.
"An even higher tax has been decided by the Russian government to be collected from the state-controlled company Transneft, which manages the network of oil and fuel pipelines. Transneft will be required to hand over 40% of its gross profits as a corporate income tax (CIT)," writes "GW."
"IT companies, which have been exempt from CIT in Russia for the past three years, will now pay this tax at a reduced rate of 5%," the newspaper adds.
