Russia plans to raise income tax. On the 20th, the Russian Parliament preliminarily approved a bill that raised the income tax for the wealthy elites. This bill has passed the first of three readings in the State Duma, Russia’s lower parliament house, as Moscow continues to spend a vast amount of money on military operations in Ukraine. The proposal includes a progressive tax on personal income, a shift from the current flat tax introduced in 2001. If the bill passes, a 13% tax will be imposed on incomes up to 2.4 million rubles ($27,500). For incomes exceeding that amount, progressive tax rates will apply. A maximum rate of 22% will be imposed for incomes exceeding 50 million rubles ($573,000).
The 13% flat tax was introduced to prevent tax evasion and to increase national revenue. Russian President Vladimir Putin stated that the tax increase would affect not more than 3.2% of Russian taxpayers. The reform plan also calls for raising the corporate income tax rate from 20% to 25%. Russia’s Interfax news agency estimated an additional 2.6 trillion rubles ($29 billion) on top of federal budget revenue by 2025 if the bill is implemented. In 2021, Russia reformed tax rates to require individuals earning more than 5 million rubles annually to pay 15% on the exceeding amounts.
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