Finance Ministry Unveils 2027 Budget Draft With Fresh Tax Hikes to Fund War Deficit
The proposed tax hikes come just weeks after the Kremlin insisted that officials were not discussing any further increases.
On Thursday, Russia's Finance Ministry unveiled its draft budget proposal for 2027, introducing new tax hikes to address a growing military spending deficit. The budget outlines a progressive tax scale of 13%-22% on passive personal income, such as bank deposit interest, stock dividends, real estate sales, and securities trading.
Currently taxed at 13-15%, these tax increases are expected to affect approximately 4 million high-income Russians. Additionally, the draft budget proposes a 35% tax on dividend payouts transferred to non-resident "Type C" bank accounts and requires mutual investment funds to pay a 15% tax on passive earnings.
To generate extra revenue, the Finance Ministry also suggests applying a 22% value-added tax (VAT) to cross-border online retail purchases and imposing a flat customs fee of 100 rubles ($1.18) on international packages under 200 euros ($227). Mining and metallurgical companies would face a 30% tax on excess earnings due to recent increases in global commodity prices.
The Kremlin initially denied that the proposed tax hikes were under discussion, but the Finance Ministry defended the moves, emphasizing that defense and security remain a top priority for the government. The budget proposal aims to address social obligations, support defense and security, assist special military operation participants and their families, and foster technological leadership. Russia's 2027 draft budget predicts a deficit of around 2% of GDP, based on a benchmark oil price of $50 per barrel.
Despite recent tax increases, Russia's government has yet to reduce the fiscal strain on the federal budget, which is projected to reach 3% of GDP by the end of 2026, more than double the planned amount. The Kremlin did not comment on the budget proposal. The Moscow Times, an independent news organization, opposes these tax increases and stands against the Kremlin's actions, which have led to the organization being labeled as undesirable and criminalized, putting its staff at risk of prosecution.
Written by urgent.news from The Moscow Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
