Reuters: Kremlin eyes VAT increase to plug budget deficit

The Russian government is seriously considering the possibility of further tax increases in the country to reduce the treasury deficit and maintain the budget rule, Reuters reports, citing its own sources.

The news agency emphasises that the largest revenue source for the treasury is the value-added tax (VAT). An increase in the VAT, especially since the authorities have already raised other taxes.

Officials plan to submit the draft budget to parliament on September 29. Vladimir Putin has already approved its key provisions, and lawmakers are unlikely to make significant changes during the official parliamentary debates, the report states. 

Last week, The Bell, citing three officials, also reported that the Russian government is discussing raising the VAT to 22% from the current 20%.

VAT plays a crucial role in funding the Russian treasury. Authorities last raised the VAT rate in 2019, from 18% to 20%. In 2024, officials expect VAT to generate nearly 37% of all federal budget revenue, or 13.5 trillion rubles ($161.5 billion).

By Khagan Isayev