Russia’s government is once again eyeing tax increases to plug a widening budget deficit driven by record military spending. Parliament (Duma) will be presented with a 2026 budget on 29 September which will likely include the rise.
Officials are considering raising the country’s standard VAT rate from 20% to 22%, with potential exemptions for socially significant goods such as basic foodstuffs and essential services.
The country’s 2025 deficit target has already tripled to 1.7% of GDP, and is still expected to exceed this by year end.
The government is expected to decide soon, as the 2026 draft budget is due to be submitted to the Duma by the end of September. While no final decision has been made, insiders suggest that raising taxes — and VAT in particular — is increasingly seen as the only viable option to sustain fiscal stability in the face of spiralling war costs.
