Russia’s wealthy elite could face a higher source of income taxes, according to a proposal submitted Tuesday through the country’s Finance Ministry. The proposal, which will most likely be submitted to parliament for approval and then through President Vladimir Putin, comes as Russia continues to spend huge sums of cash on the military crusade in Ukraine.
The proposal refers to a progressive private source of income tax and represents, of course, a replacement for the existing flat-rate tax, which was seen as bringing order and improving tax collection after its introduction in 2001.
It plans to impose a 13% tax on profits of up to 2. 4 million rubles ($27,000) a year. For earnings above this amount, higher tax rates would apply. The maximum tax would be 22% for annual earnings above 50 million rubles ($555,000). ).
The tax increase would affect only 3. 2% of Russia’s working population, Finance Minister Anton Siluanov said on the ministry’s website. The 2. 4 million rubles are about three times more than the country’s average salary, he said in a comment.
“The proposed progressive scale does not deserve the overwhelming majority of the population,” he said. The flat 13% tax was introduced in an attempt to deter tax evaders and increase government revenue. In 2021, Russia replaced the formula for other people who earn more than five million rubles a year to pay 15% of the amount above the threshold.
The new tax generated another 8. 3 billion rubles in the first year of its implementation, Russian business news site RBC reported.