Russian Ministry of Finance Targets Higher VAT for Defense Budget

The Russian Ministry of Finance proposes to increase the VAT rate to 22% in 2026, citing the need to finance the war against Ukraine and support the defense sector.

The Gaze reports on it, referring to Deutsche Welle, citing the Ministry of Finance of Russia.

According to the Ministry, the main purpose of this step is to finance the country's defense and security needs, including providing the Armed Forces with the necessary equipment and weapons.

In addition to VAT, the Russian government is considering raising other taxes, particularly on the gambling industry, to increase budget revenues during the war.

The Ministry of Finance notes that the additional funds will also be used to pay military personnel and support their families, as well as to modernize defense industry enterprises.

Earlier, Russian President Vladimir Putin said he was ready to raise taxes to cover budget costs related to the war against Ukraine. The new tax initiatives reflect Moscow's desire to increase financial resources for military operations and provide social support to military families.

At the same time, Russia officially declared the stability of its economy and the successes of its army in Ukraine, rejecting comments by former US President Donald Trump, who called the country a “paper tiger” and urged Ukraine to take advantage of Moscow's economic weakness to regain the captured territories.

The Kremlin spokesman rejected Trump's claim, stressing that Russia is a “bear” and demonstrates macroeconomic stability. However, he acknowledged that the country's economy is facing challenges in various sectors due to sanctions and global economic turmoil.

As The Gaze reported earlier, the Russian economy is on the verge of stagnation, GDP growth has almost stopped, industry is shrinking, and regions are accumulating huge budget deficits while spending money on military payments.