Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, told RIA Novosti that business and authorities have settled on a mandatory one-time payment to the budget.
“We agreed that this would be a mandatory payment — an unexpected tax-like levy, a wind-inspired charge born from a unique mix of favorable operating conditions for companies and a set of circumstances. Sectors that deliver strong financial results will be involved,” said Shokhin, head of the RSPP.
In early February, Andrei Belousov, First Deputy Prime Minister of the Russian Federation, stated that the government, together with the business community, had developed the plan for one-time voluntary contributions from large enterprises in 2023, noting the strong financial performance of several companies.
Shokhin noted that it remains unclear how to calculate this “surplus income,” which he said is not really extra profit. The method for calculating the financial indicators of companies subject to the payment and how the fee will be collected this year, not next year, also remains unresolved.
“A lump-sum payment could be made as a kind of advance payment. My view is that introducing an advance mechanism might be appropriate, but this early payment should be incentivized with some discount for companies.”
Detail
Earlier on February 21, Finance Minister Anton Siluanov told reporters that the voluntary contribution is planned to be collected this year.
“We are talking about a one-time business participation in the current year.”
The minister also noted that the payment would apply only to profits that exceed expectations. “We will focus on what the business can pay from the increase. We will compare the rise in 2022 and 2021 financial results with 2020 and 2019.”
“There are issues with subtracting capital investments from this amount, but these points are still being worked out,” Siluanov said.
On February 17, the minister previously said that payments from business activity should bring about 300 billion rubles to the budget.
According to him, the measure would be implemented through changes in tax legislation. Siluanov noted that the business community would participate in financing government programs. Therefore, it is expected that about 300 billion rubles would go to the treasury.
The oil and gas sector and small businesses would not be affected by the levy.
“I will say right away that small businesses and the oil and gas sector are not being considered for involvement. Why? Because a number of tax innovations in the oil and gas industry have already centralized some of the additional rent that this sector receives due to the price situation.”
According to Siluanov, “business is ready to share some of its growth with the state.”
Also on February 17, the Kremlin commented on the initiative. Journalists asked presidential spokesman Dmitry Peskov how the Kremlin would treat a company that did not wish to contribute.
“The keyword is ‘volunteer,’ but of course the interaction between country leadership and business is a two-way street. So here, although we are all on the same side, both sides need to be clearly aware of the realities we live in and the country’s needs right now,” he replied.
Where did the collection come from
The idea of a one-time tax collection for businesses was voiced by Deputy Prime Minister Belousov on February 8. He emphasized that the initiative is not a tool to raise taxes and did not specify the fee amount.
Earlier, The Bell — an organization that was listed as a foreign agent by the Justice Ministry — reported that the government offered businesses a one-time payment of 200 billion to 250 billion rubles to the budget. In response, the business community proposed increasing the income tax by 0.5 percentage points to 20.5% for 2023.
“Last year’s financial results were very strong, and for many companies the results remained notably positive through the first half of the year,” Belousov said.
On February 6, the Finance Ministry announced that the federal budget deficit in January 2023 reached 1.76 trillion rubles. Advance financing for some contractual expenses, including accelerated VAT refunds, rising costs due to expedited contracts, and public procurement, contributed to a record early-year deficit. The budget law anticipates a deficit of 2.93 trillion rubles for 2023.
Russia closed 2022 with a budget deficit of 3.35 trillion rubles (2.3% of GDP). The country’s largest deficit on record was 4.1 trillion rubles in 2020, when coronavirus restrictions severely worsened the economy.