Russia’s parliament gives preliminary OK to a proposal that increases income taxes for the wealthy

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This article was published 20/06/2024 (471 days ago), so information in it may no longer be current.

MOSCOW (AP) — Russia’s parliament on Thursday gave preliminary approval to a bill that outlines higher income taxes for Russia’s wealthy elite.

The bill, which was passed in the first of three readings in the State Duma, Russia’s lower parliament house, comes as Moscow continues to spend vast amounts of money on the military campaign in Ukraine.

The proposal involves a progressive tax on personal incomes and represents a change of course from the current flat-rate tax that was credited with bringing order and improving tax collections after it was introduced in 2001.

It envisages imposing a 13% tax for incomes of up to 2.4 million rubles ($27,500) a year. For incomes over that amount, a steadily higher tax rate would apply. The maximum tax rate would be 22% for annual incomes exceeding 50 million rubles ($573,000).

The increased taxes would affect not more than 3.2% of Russia’s taxpayers, Russian President Vladimir Putin said this week, citing calculations by the Finance Ministry.

The proposed reform also calls for increasing the company income tax rate from 20% to 25%.

Russia’s news agency Interfax estimated that the reform, if implemented, could bring 2.6 trillion rubles ($29 billion) in additional federal budget revenues in 2025.

The 13% flat tax was put into effect in an attempt to discourage tax evaders and boost the state’s revenue. In 2021, Russia modified the system so that people earning more than 5 million rubles a year would pay 15% on the amount above the threshold.