Russia’s top business lobbying group proposes first corporate income tax increase since war began

The Russian Union of Industrialists and Entrepreneurs (RSPP), Russia’s chief business lobbying group, has proposed raising the 20 percent income tax on Russian businesses by 0.5 percentage points in 2023, the independent news outlet The Bell reported on Wednesday, citing knowledgeable sources.

The recommendation comes in response to an earlier proposal from Russia’s Finance Ministry and Federal Tax Service, who suggested that businesses “retroactively” pay income tax for 2022 with currency exchange rate gains taken into account. According to the RSPP, that would require Russian businesses to pay 1.8 trillion rubles (about $25.2 billion) in income tax this year, with 270 billion rubles (about $3.8 billion) of that amount going to the federal budget.

After the value of the ruble dropped in the wake of Russia’s full-scale invasion of Ukraine, Russian authorities allowed businesses to disregard the positive exchange rate difference when calculating income tax until they repay loans in foreign currency or close foreign currency deposit accounts, The Bell explained. Then, after the ruble began to bounce back, regional budgets began losing significant amounts of revenue from exporters.

The Russian Finance Ministry announced Monday that the country’s budget deficit reached 1.76 trillion rubles (about $24.8 billion) last month, marking its highest January budget deficit since at least 1998.