Russia may raise VAT to 22 percent as war spending deepens budget deficit — The Bell

The Russian government is weighing an increase in the value-added tax (VAT) as war spending deepens the country’s budget deficit, The Bell reported, citing people familiar with the discussions.

“Taxes will definitely go up,” one source told the outlet. Raising VAT is seen as one of the most likely options, though exemptions would remain for socially important goods, the sources said.

One person said officials are considering lifting the rate from 20 to 22 percent. Another noted that other measures are also under discussion, including further increases to corporate profit and personal income taxes. On January 1, 2025, Russia already raised the corporate tax rate from 20 to 25 percent and introduced a progressive income tax with a top rate of 22 percent.

No final decision has been made, The Bell noted, but its sources see no alternative to higher taxes. The draft budget for next year is typically submitted to the State Duma in late September.

VAT was last raised in January 2019, from 18 to 20 percent. It is a cornerstone of Russia’s federal budget: in 2024, it accounted for 70 percent of revenues together with the mineral extraction tax, according to The Bell. In late August 2025, a government source told Reuters that higher taxes were inevitable — otherwise, Russia would not be able to “make ends meet, even with a reduction in defense spending.”