Russia plans to raise VAT from 20 to 22 per cent in 2026 to fund its war on Ukraine, prioritizing defence over civilian spending.
Russia’s Finance Ministry announced Wednesday that it plans to increase value-added tax (VAT) from 20 to 22 per cent in 2026 to help finance its ongoing war on Ukraine.
The draft budget prioritizes defence, security, and welfare for soldiers and their families, which the ministry described as “strategic priorities.” Military and security spending already makes up about 40 per cent of government expenditure for 2025, official estimates show.
While state defence contracts and payments to soldiers have spurred growth in the war economy, civilian sectors are showing strain, with inflation eroding household incomes.
The government said the lower 10 per cent VAT rate on food, medicines, and children’s goods would remain unchanged to protect vulnerable groups.
Russia, led by President Vladimir Putin, has been waging a full-scale war against Ukraine for more than three and a half years. Parliament is expected to approve the tax hike with little opposition.