Overview

• The Finance Ministry’s 2026 budget proposal lifts the value-added tax from 20% to 22% starting next year.
• Officials say the additional revenue will primarily fund defense and security and support for soldiers and their families, with social obligations maintained.
• The reduced 10% VAT rate would continue for food, medicines and child-related goods, limiting the rise in prices for basic essentials.
• Military and security already account for roughly 40% of 2025 state spending, while oil and gas receipts fell by more than 20% in the first eight months and the deficit reached 1.9% of GDP, exceeding the full-year plan.
• Parliament must still approve the budget, a step widely viewed as procedural, and the government has signaled other potential tax increases such as on gambling.