Kremlin hiking taxes in Russia to fund ongoing war against Ukraine, U.K. officials say

Funding Russia’s war against Ukraine, now in its third year, is likely a driving force behind the Kremlin’s decision to increase the country’s corporate tax rate from 20 to 25% and personal income tax rate from 15 to 22%, British officials said Sunday.

The tax changes are expected to raise about $29 billion in additional revenue in 2025, U.K. military officials posted on X in their latest assessment of the battlefield conditions in Ukraine.

“The increased tax burden on businesses will almost certainly restrict future investment and growth of non-military sectors,” British officials said. “Russia’s economic growth is highly likely being driven by high state investment into the military sectors of the economy.”

Russian government spending in 2024, especially in the defense sector, is expected to increase by about 15% over 2023 and will continue to rise in 2025. But, British intelligence analysts say government investments in Russia’s non-military businesses are expected to stagnate.

“Military sectors are also highly likely monopolizing much of the available labor resources,” in Russia, U.K. officials said. “The added costs to businesses will almost certainly restrict further private investments into non-military sectors.”