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On Wednesday, September 24, the Russian Ministry of Finance introduced a bill to raise taxes aimed at funding the "defense and security" sector, essentially the ongoing war in Ukraine, according to the ministry's official website.

The bill proposes increasing the standard value-added tax (VAT) rate from 20% to 22% and lowering the income threshold for VAT under the simplified system from 60 million to 10 million rubles. Russia's preferential VAT rate of 10% will continue to apply to essential goods such as food, medicine, and children's products.

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The proposal also includes a 5% tax on accepted gambling bets and a 25% income tax for bookmakers.

Although the Ministry of Finance does not explicitly mention budgetary issues, these measures implicitly acknowledge that current revenues are insufficient to cover military spending.

Russia initially drafted its 2025 budget with a deficit of just 0.5%. By June, the planned deficit had increased 3.5-fold due to declining oil and gas revenues. However, this still underestimated the problem, as official data show that from January to August the deficit exceeded 4 trillion rubles, or 1.9% of GDP.

  • On August 23, US President Donald Trump described Russia as a "paper tiger," adding that dictator Vladimir Putin and the country are in "great economic trouble."
  • Ukraine's Foreign Intelligence Service expects the Russian economy to start collapsing by the end of 2025 under the combined pressure of sanctions and military spending.