Russia Proposes New Taxes on Mining, Investments and Online Purchases to Fund War Budget

Russia’s government has prepared a 2027–2029 state budget that pairs heavy military spending with new tax proposals aimed at mining companies, investors and consumers. The three-year spending plan is scheduled for consideration in parliament on Thursday and follows tax measures announced after September’s parliamentary elections.

The draft budget projects expenditure of about 48.8 trillion roubles against revenue of 43.3 trillion roubles in 2027, producing a deficit of 5.443 trillion roubles, or 2.2 per cent of gross domestic product. Shortfalls equivalent to 1.9 per cent of GDP are projected for both 2028 and 2029, according to Interfax.

“They need money for state coffers, they need to collect more from people, from ordinary people.”

The deficit this year has already swelled beyond forecasts because of lavish military spending and tepid economic growth amid sanctions, high interest rates for non-military companies, labour shortages and Ukrainian strikes on oil refineries and export terminals. Through August the deficit reached 5.8 trillion roubles, about 72 billion US dollars, according to the Kyiv School of Economics.

The latest tax proposals focus on a narrower segment than last year’s broader increases. The government proposes a windfall profits tax of 20 to 30 per cent on mining companies that have benefited from rising commodity prices, affecting producers of gold, nickel and iron ore.

Higher rates of 13 to 22 per cent are proposed on income from interest, dividends and proceeds from selling property. Such income is currently taxed at 13 per cent below an annual threshold of 2.4 million roubles and 15 per cent above it.

Other measures taking effect on 1 January include a charge of 100 roubles per parcel and 22 per cent VAT on formerly tax-free foreign goods worth less than 200 euros bought online. A 35 per cent tax is also proposed on dividends paid into restricted accounts held by foreign investors from “unfriendly countries.”

Analysts say Moscow can meet its near-term financing needs, but households, businesses and civilian development face mounting pressure as the war in Ukraine continues to absorb state resources.