Russia's Finance Minister Siluanov Proposes Progressive Income Tax, Corporate and Property Tax Hikes

May 28, 2024, 07:38 PM

The Russian Ministry of Finance, led by Finance Minister Siluanov, has proposed significant changes to the country's tax system for the first time in over 20 years. The current flat-rate income tax of 13% for all individuals will be replaced with a progressive tax system. Under the new proposal, individuals earning up to 2.4 million RUR ($27,100) will continue to pay 13%, while higher income brackets will see increased rates: 15% for incomes between 2.4 million and 5 million RUR, 18% for incomes between 5 million and 20 million RUR, 20% for incomes between 20 million and 50 million RUR, and 22% for incomes exceeding 50 million RUR. The changes will affect only 3.2% of the workforce. Additionally, the corporate profit tax will increase from 20% to 25%, and property taxes on certain sales will also rise. These measures are expected to raise approximately 0.5% of GDP annually from income tax and around 1% of GDP from corporate profit tax starting in 2025. The proposed tax reforms aim to address the budget deficit exacerbated by the ongoing conflict with Ukraine and sanctions from Western countries.