Russia is raising new revenue from mining companies, investors and consumers as the invasion of Ukraine puts sustained pressure on state finances. The 2027–2029 budget passed its first parliamentary vote alongside tax measures announced only after September's elections.
The deficit reached 5.8tn rubles, about $72bn, through August. That was almost 50% above the previous year and already exceeded the revised annual target of 4.8tn rubles. Military expenditure, weak civilian growth, sanctions, labour shortages and attacks on energy infrastructure all contributed.
The latest package is narrower than last year's broad VAT increase. It proposes a 20%–30% windfall tax on iron-ore, nickel and gold producers, and raises rates on interest, dividends and property-sale income to a range of 13%–22%.
Consumers and foreign investors face additional levies from January. Small imported parcels would carry a 100-ruble charge and 22% VAT even below the former €200 exemption. Dividends placed in restricted accounts for investors from “unfriendly” countries would be taxed at 35%.
Foreign companies have also become potential fiscal resources. A Russian subsidiary of German retailer Metro was placed under temporary administration and contributed one billion rubles to a fund buying vehicles, communications equipment and anti-drone systems. Its German parent said it neither controlled nor supported the payment.
The headline numbers do not yet indicate a financial crisis: debt remains low, unemployment is at a record low and oil revenue benefits from high prices. But sanctions block access to international bond markets, domestic banks demand better terms and liquid sovereign-wealth assets have fallen to 1.7% of GDP.
The deeper risk is a prolonged erosion of civilian investment and welfare. Military-linked industries receive state demand while infrastructure and ordinary businesses struggle. Analysts estimate that existing buffers could be exhausted by early 2028 without further tax increases, spending cuts or more coercive borrowing from domestic banks.
