Russian Finance Ministry suggests raising VAT raft in draft budget

2025-09-25 09:10:29

(MENAFN) According to reports, Russia’s Finance Ministry has suggested raising the value-added tax (VAT) rate in 2026 as part of its draft federal budget, aiming to increase state revenue and channel more funds toward defense and social support programs.

The ministry proposed increasing the standard VAT rate from 20% to 22%, which it estimates could generate roughly 1 trillion rubles ($11.9 billion) in additional revenue. The funds are intended to strengthen the armed forces, cover military salaries, support families, and modernize defense enterprises. The proposal is included in the draft 2026–2028 budget, which the cabinet approved on Wednesday. The draft maintains a reduced 10% VAT rate for socially essential goods.

Other tax measures in the budget include a 5% levy on bets handled by bookmakers and ongoing corporate profit taxation. The ministry described the 2026 draft as “balanced and sustainable.”

The proposal comes amid a widening forecast budget deficit. In April, the Finance Ministry increased its projected 2025 deficit from 0.5% to 1.7% of GDP. VAT already accounted for roughly 37% of federal revenues in 2024, highlighting its critical role in financing government spending.

The draft budget anticipates federal revenues of 40.3 trillion rubles ($481 billion) in 2026, with non-oil and gas income expected to represent nearly 78% of the total. Projected expenditures stand at 44.1 trillion rubles ($526 billion).

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