Putin signs Bill increasing income taxes for the rich in Russia

Moscow, Jul 12 (AP) Russian President Vladimir Putin on Friday endorsed a bill that raises income taxes for the rich, part of efforts to help fill government coffers during the fighting in Ukraine.

Putin signed the bill into law two days after it was approved by both houses of parliament.

The legislation, which envisages a progressive tax on personal income, is a major change from the flat-rate tax that was widely credited with improving revenue collections after it was introduced in 2001.

The new law imposes a 13 per cent tax for incomes of up to 2.4 million rubles (USD 27,500) a year. For incomes over that amount, a steadily higher tax rate would apply, with the maximum rate of 22 per cent for incomes exceeding 50 million rubles (USD 573,000).

Putin has said that the tax increase would affect no more than 3.2 per cent of Russia's taxpayers.

The bill also calls for an increase in the company income tax rate from 20 per cent to 25 per cent.

The tax reform is estimated to bring 2.6 trillion rubles (USD 29 billion) in additional federal revenues in 2025.

A 13 per cent flat tax was put into effect quickly after Putin's first election in 2000 in an attempt to fight widespread tax evasion and boost state revenue. In 2021, Russia modified the system so that people earning more than 5 million rubles a year would pay 15 per cent on the amount above the threshold.

Chris Weafer, CEO of Macro-Advisory consultancy, described the increase in taxes as part of government efforts to reduce a heavy reliance on oil revenues as Western nations tighten sanctions against Russian oil exports.

“The government is looking to broaden out the tax base to make it less dependent on external factors and to therefore make it more secure by shifting the orientation as best they can towards domestic sourcing,” he said after the bill's endorsement by lawmakers. AP