The Russian Finance Ministry has drafted a 2026 budget and plan for 2027–2028 that will raise the general value-added tax, or VAT, from 20 to 22 percent.
The ministry said the extra revenue would go primarily toward defense and security spending.
The reduced VAT rate of 10 percent will remain in place for socially important goods, including food, medicine and medical products, children’s items, and other essentials.
Other measures to bolster revenue include eliminating temporary pandemic-related breaks on insurance contributions, lowering the income threshold for small businesses eligible for simplified VAT payments from 60 million rubles to 10 million rubles (about $700,000 to $100,000), changing the tax regime for bookmakers, and privatizing major state-owned companies, according to RBC.
The proposed amendments to Russia’s Tax Code, including the VAT increase, would take effect on January 1, 2026. The budget package has been sent to the government for review and is expected to be submitted to the State Duma by the end of September.
The Bell, which previously reported on the ministry’s plans, noted that the measure is aimed at covering defense spending. By the outlet’s estimate, the increase could bring in an additional 0.5 percent of GDP, or about 1 trillion rubles ($12 billion) annually. At the same time, The Bell noted, the higher tax could halt the slowdown in inflation sought by the Central Bank, curb consumption, and further slow GDP growth.
Russia last raised VAT in January 2019, from 18 to 20 percent. In 2024, VAT, together with the mineral extraction tax, accounted for 70 percent of federal budget revenues.