icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm
29 May, 2024 11:47

Russia poised to overhaul tax policy

The new progressive five-bracket system is expected to come into effect next year
Russia poised to overhaul tax policy

Russia’s Finance Ministry has submitted to the government a package of amendments to the country’s tax system, Rossiyskaya Gazeta reported on Tuesday. The changes aim to introduce a new progressive tax scale and amendments to the 2024-2026 budget legislation.

Last month, Russian Finance Minister Anton Siluanov announced plans for public discussion regarding an update to the tax system. According to Rossiyskaya Gazeta, the official paper of the government, the draft amendments submitted on Tuesday were the result of public discussion and consultations in parliament.

The changes will see the introduction of five income brackets instead of the current two. Workers who earn the equivalent of up to $26,900 a year will pay 13% tax. Those with incomes ranging from $26,900 to $56,000 a year will pay 15%; while those earning between $56,000 and $224,200 a year will pay tax at 18%. A rate of 20% will apply to taxpayers with an annual wage of between $224,200 and $560,600, and the highest earners with annual income above $560,600 will pay 22% tax.

“Adoption of the proposed changes will ensure a stable and predictable environment for citizens, businesses and regions… It will also boost the country’s economic well-being,” Siluanov said.

The amendments are expected to be passed by the parliament over the next two months, allowing the changes to take effect on January 1, 2025. According to Finance Ministry calculations, the measures are expected to bring in over $29 billion to state coffers next year.

Russia had a progressive tax scale up until 2001, when the government decided to introduce a flat rate of 13% for all incomes in a bid to attract investment into the country. In 2021, an extra 15% bracket was introduced for incomes exceeding the equivalent of roughly $68,500 a year.

Russia’s tax system will remain competitive – even with the new five-bracket scale, the Finance Ministry said. It will align with those of neighboring countries such as Belarus, Armenia, and Azerbaijan. 

Across Western countries, the personal income tax burden is much higher, the ministry noted. In the UK, the maximum personal income tax rate is 46%, while Germany has a rate of 47.5%. Austrian taxpayers face a rate of up to 55%, and France’s top rate is 55.4%.

For more stories on economy & finance visit RT's business section

Podcasts
0:00
27:11
0:00
25:16