Media: US firms become top foreign tax contributors to Russia, paying over $1 billion

U.S. companies that have remained in Russia have paid more than $1 billion in taxes to the Kremlin in 2023, making the United States the largest foreign contributor to Russian profit taxes.

According to exclusive figures obtained by Newsweek from campaign group B4Ukraine and the Kyiv School of Economics (KSE) Institute, American firms contributed $1.2 billion in profit taxes last year, a significant increase from the $915.7 million paid in 2021, Caliber.Az reports.

The continued business presence of U.S. firms in Russia has drawn significant criticism, especially as Russia's invasion of Ukraine, which began on February 24, 2022, prompted a global exodus of companies that sought to apply economic pressure on President Vladimir Putin's regime. Despite this, a sizable number of U.S. corporations have continued operations in Russia, with varying levels of involvement. Research from the Yale School of Management’s Chief Executive Leadership Institute (CELI) estimates that 123 large U.S. companies remain in Russia, while KSE includes mid-sized firms, bringing the total to around 328 U.S. companies.

The 10 U.S. firms that paid the highest profit taxes to Russia in 2023 include tobacco giant Philip Morris International ($220 million), beverage producer PepsiCo ($135 million), confectionery maker Mars ($99 million), consumer goods company Procter & Gamble ($67 million), Mondelez ($62 million), investment bank Citigroup ($53 million), agricultural firm Cargill ($50 million), pharmaceutical corporation Johnson & Johnson ($42 million), Coca-Cola Hellenic ($34 million), and oil services company Weatherford ($32 million).

Philip Morris International (PMI) confirmed it scaled back its manufacturing operations and suspended planned investments in Russia following the war's onset. However, the company has resisted selling its business in Russia, with CEO Jacek Olzak acknowledging the financial repercussions. Mondelez, which has also remained active in Russia, defended its position, claiming investors were largely indifferent to the ongoing war's impact on business operations.

Coca-Cola, which ceased selling drinks in Russia, still has a stake in Coca-Cola Hellenic, which continues to sell beverages in the country under a local brand, Dobry Cola. PepsiCo, Mars, Procter & Gamble, and others have reduced their activities but maintain operations deemed essential.

Citigroup announced in September 2024 that it would wind down its operations in Russia. A company spokesperson explained that Citigroup was in the process of ending nearly all institutional banking business in Russia, aside from those operations necessary to fulfill legal obligations.

In addition to the U.S., Germany and Austria were the second and third-largest contributors to Russia's tax revenue in 2023, paying $693 million and $579 million, respectively.

Despite international pressure and the declining combined revenues from U.S. companies operating in Russia, from $50 billion in 2021 to $30.5 billion in 2023, the U.S. continues to be a major financial supporter of the Russian government. Companies face a 15 percent exit tax and are often forced to sell assets at steep discounts if they choose to leave the country. The Russian government generated $385 million from exit taxes between January and March 2024.

By Khagan Isayev