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18h ago

Russia Weighs VAT Hike to 22% as Budget Gap Widens

The budget rule limits use of oil windfalls, pushing policymakers toward a tax move to bolster revenues.

Russia's President Vladimir Putin attends a meeting with Governor of the Primorsky region Oleg Kozhemyako on the sidelines of Eastern Economic Forum in Vladivostok, Russia, September 5, 2025. Sputnik/Valery Sharifulin/Pool via REUTERS/File Photo
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Overview

  • Four sources told Reuters the government is discussing lifting value-added tax from 20% to 22% to curb the deficit and preserve reserves.
  • The measure is being weighed for inclusion in the 2026 budget, with no final decision yet and the draft plan due to reach parliament on Sept. 29.
  • Key elements of the draft are typically settled with President Vladimir Putin in advance and rarely change during the formal debate.
  • Central bank governor Elvira Nabiullina signaled preference for raising revenue over widening the deficit, even as a past VAT hike added to inflation.
  • VAT provided about 37% of federal revenue in 2024, and Reuters estimates a two-point increase could roughly halve the projected 2026 shortfall under a budget rule the finance minister says will remain.