Russia raises taxes to pay for war against Ukraine - British intelligence

The UK Ministry of Defense reports on June 16.

According to it, tax changes in 2025 will generate approximately RUB 2.6 trillion rubles (USD 29 billion) in additional revenue for the Russian budget. The corporate tax rate will rise from 20% to 25%, and additional tax brackets will be introduced under the new income tax system. Additionally, the highest income tax rate in Russia will increase from 15% to 22%.

The UK Ministry of Defense believes that the extra revenue from the corporate tax increase will almost certainly be used to cover increasing government expenditures. Russia's public spending is expected to grow by about 15% this year compared to 2023 and is likely to continue increasing.

“Spending growth is almost certain to continue in 2025, with defense spending expected to rise along with social and infrastructure spending,” the ministry stated.

Experts add that the increased tax burden on businesses will almost certainly restrict future investment and growth in Russia's non-military sectors. British intelligence emphasizes that Russia's economic growth is likely being driven by high state investment in military sectors, while investment in non-military sectors is expected to stagnate.

The report also notes that military sectors are likely to monopolize much of the available labor resources. According to the UK Ministry of Defense, the added costs to businesses will almost certainly restrict further private investment into non-military sectors.

• Last year, Western banks that remained in Russia paid over EUR 800 million in taxes to the country.