Russia raises taxes to finance war against Ukraine - intelligence

Russian leader Vladimir Putin (photo: kremlin.ru)

Russia is raising taxes to continue financing the war against Ukraine. However, this will have consequences for the Russian economy, states the British Ministry of Defense.

The tax changes in 2025 are expected to generate additional revenues to the Russian budget of about 2.6 trillion rubles ($29 billion). The corporate tax rate will increase from 20% to 25%, and additional charges will be introduced as part of the new tax system. The maximum corporate tax rate in Russia will increase from 15% to 22%.

British intelligence emphasizes that the additional revenue generated will be used to finance growing government spending. Russian government spending is projected to grow by about 15% this year, and is likely to continue to grow.

"This increase in spending will almost certainly continue in 2025, as defense expenditure will highly likely increase, alongside social and infrastructure spending," the report says.

Increasing the tax burden on businesses will limit future investment and growth in non-military sectors. In addition, the military sectors monopolize a significant portion of the available labor force in Russia.

Analysts say that Russia has already put its economy on a war footing. Thus, the Kremlin is preparing for a long-term war.

Estonian intelligence has previously noted that Russia is already preparing for the next war. According to the intelligence community, the conflict could begin within 10 years and it is likely to be a war with NATO.