Russia Hikes Taxes on Foreign Investors and Gold to Fund War Effort

These measures include raising the dividend tax for non-resident companies from 15% to 35% and increasing taxes on gold and metal producers from 20% to 30%.

The proposals follow a legislative election where Vladimir Putin’s party secured a wide majority. According to the pro-Kremlin news agency Tass, the tax hikes aim to capture additional revenue from foreign assets remaining in Russia and from commodity producers benefiting from high global prices.

Increased Tax Burden on Non-Resident Investors

The Kremlin is targeting dividends paid to companies categorized as non-residents. Tass reports that the proposed rate will jump to 35%, more than double the previous 15% rate. While many Western firms exited Russia after the 2022 invasion of Ukraine, significant assets and equity stakes remain within the country.

The Financial Times reports that these proposals would worsen the position of foreign investors whose Russian earnings are already largely blocked within the country.

Gold Production and Commodity Levies

The government is also seeking to raise the tax on gold and metal producers from 20% to 30%. Tass states this move is intended to counterbalance the additional income generated by rising global commodity prices.

Russia is the second-largest gold producer globally as of 2024, trailing only China. The Moscow Times reports that Russian gold production is expected to reach record levels by 2026. Although the Kremlin stopped publishing official gold sale statistics in 2022, analyst estimates indicate a surge in sales in recent years.

New Customs Duties and E-commerce VAT

Beyond corporate taxes, the Kremlin proposed new charges on consumer imports. Tass reports a proposed customs duty of 100 rubles (approximately 1 euro) for personal parcels valued up to 200 euros sent from abroad.

The government also suggested implementing a 22% Value Added Tax (VAT) on goods traded via international e-commerce platforms.

Military Spending and Budget Deficits

These revenue-generating measures come as Russian public spending rises to support the war effort. The Russian Ministry of Finance projects the federal budget deficit will be approximately 2% of GDP annually between 2027 and 2029.

Reuters cited the ministry stating that these resources are intended to equip the armed forces with necessary weaponry, modernize defense firms, and provide financial allocations to military personnel.

Financial pressure has intensified due to Ukrainian drone attacks on Russian energy infrastructure. Reuters reports that Moscow has spent record amounts on drone defense, facility repairs, and the importation of fuel to address national shortages.

S&P Global estimates that roughly 60% of Russian refining capacity was offline in July, leading to reports of long fuel lines at stations such as Lukoil in Moscow.