Russia Plans VAT Increase

(MENAFN) The Russian Finance Ministry has suggested an increase in the value-added tax (VAT) rate for 2026 in its draft budget.

This step aims to enhance state revenues and channel additional funds toward defense and social welfare, according to the ministry.

Under the proposal, the standard VAT rate would climb from 20% to 22%, expected to generate approximately 1 trillion rubles ($11.9 billion) in extra income.

The ministry stated that the additional resources would be allocated to equipping the armed forces, covering military salaries, supporting families, and modernizing defense industries.

This initiative is part of the federal budget plan for 2026–2028, which the cabinet approved on Wednesday. The draft maintains the 10% reduced VAT rate for socially essential goods.

The budget also includes other tax measures, such as a 5% levy on bets accepted by bookmakers and continued corporate profit taxation.

The ministry characterized the 2026 draft as “balanced and sustainable.”

The proposal emerges amid a widening projected budget deficit for Russia. In April, the Finance Ministry raised its 2025 deficit forecast more than threefold, from 0.5% to 1.7% of GDP.

VAT already represented around 37% of federal revenues in 2024, emphasizing its critical role as a funding source.

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