RUSSIA: The lower house of the Russian parliament has given final approval to a significant new tax bill aimed at increasing income taxes for the country's wealthy. This legislative move is intended to strengthen government finances amid ongoing challenges, including the Ukraine conflict.

The State Duma endorsed the bill in its third and final reading. However, it still awaits approval from the upper house and the signature of President Vladimir Putin to become law. This proposed legislation marks a departure from the flat-rate tax system introduced in 2001, which was instrumental in improving tax collections.

Under the new bill, individuals earning up to 2.4 million rubles annually (approximately USD 27,500) will face a 13 percent tax rate. For incomes exceeding this threshold, tax rates will progressively increase, peaking at 22 percent for annual incomes over 50 million rubles (about USD 573,000).

President Putin has emphasized that these tax increases will affect only a small fraction—approximately 3.2 percent—of Russia's taxpayers. Additionally, the bill includes a provision to raise the corporate income tax rate from 20 percent to 25 percent. It is projected that these reforms will generate 2.6 trillion rubles (around USD 29 billion) in federal revenue by 2025.

Russia initially introduced a 13 percent flat tax rate in 2000 under President Putin's leadership to combat tax evasion and bolster state revenue. In 2021, adjustments were made so that individuals earning more than 5 million rubles annually would pay a higher rate of 15 percent on earnings above that threshold.

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