Russia plans to raise VAT to help fund Ukraine war
Russia's Finance Ministry has proposed raising the value-added tax rate to 22% from 20% in 2026 to fund increased military spending for the ongoing war in Ukraine.
According to the ministry, the 10% VAT rate on food, medicine, and children's goods would remain unchanged. According to government estimates, military and security spending already accounts for about 40% of total government expenditure in the 2025 budget.
Large state orders for the defense industry and substantial payments to soldiers and their families have fueled growth in Russia's war economy. However, signs of strain are emerging in civilian sectors, and inflation is squeezing household budgets. The budget proposal still requires parliamentary approval, a step widely seen as a formality in Russia.
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