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Russian President Vladimir Putin.Mikhail Metzel/Getty Images
Russia will levy windfall benefits on large companies that have made more than 1 billion rubles in profits since 2021.
The levy is expected to raise about $4 billion, a senior finance official told RBC TV.
During the war in Ukraine, Russia recorded a deficit in the first quarter of almost 2.4 trillion rubles.
The Kremlin is feeling the pressure of its war in Ukraine so much that it is imposing a one-time windfall tax on major Russian companies and their oligarch owners.
Russia passed a bill to levy a one-time 10% windfall tax on large Russian companies, according to a statement from the Russian government announced Tuesday. Ministry of Finance.
It targets companies that have made more than 1 billion rubles, or $11.9 million, in annual profits since 2021, according to the announcement.
This levy could collectively raise about 300 billion rubles or $3.6 billion in taxes, Andrei Belousov, the first deputy prime minister, said in an interview with RBC TV, This was reported by the Interfax news agency on Tuesday.
Belousov told RBC, a business channel, that the companies themselves proposed the taxes.
“They understand they had huge windfalls for 2021 and 2022, just huge, bigger than budget,” Belousov said, per Interfax. “I have a lot of respect (for the entrepreneurs). Many of them are true patriots, regardless of what people say about them. They identify very closely with the country.”
Russia’s finance ministry said in the announcement that the taxes will be used for social spending without giving further details.
And while the announcement didn’t specify which companies could be affected by the taxes, That’s what analysts say to the Financial Times that of Russia fertilizer and metals sectors were likely candidates.
Although Russian energy faces sanctions and boycotts from many Western countries and their allies, the country is still a major commodity exporter, particularly in agriculture and some industrial raw materials — which in turn helps the companies in these sectors.
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Timur Nigmatullin, an analyst at Russian investment firm Finam, told the FT he expects information about the windfalls to be “opaque” to reduce the likelihood that these companies will face sanctions.
This case is not the first time that Russia has levied windfall taxes to fund the war in Ukraine. Last year, the country levied such a tax on energy giant gazprom after natural gas prices rose to multi-year highs after the Russian invasion of Ukraine.
Gazprom posted record profits in the first half of 2022, but full-year net profit fell 40% year-on-year due to the Kremlin’s tax increase in the second half of the year.
However, energy prices have since fallen to pre-war levels recession fears.
Russia’s energy revenues have also been hit hard by sweeping restrictions on exports, especially after the European Union – a major consumer of Russian energy – banned Russian crude from December 5.
In the first quarter of 2023 Russia posted a deficit of nearly 2.4 trillion rubles — a sharp reversal from a surplus of more than 1 trillion rubles in the first quarter of 2022. The country reported a 45% drop in quarterly energy revenues to 1.64 trillion rubles, according to data released by The Russian Ministry of Finance on April 7.
Read the original article Business Insider
