The Russian Ministry of Finance has proposed a reallocation of income tax paid by companies with branches across regions. This plan, reported by RBC, signals a shift in how tax receipts are attributed to regional budgets. The ministry notes that, at present, a significant portion of income tax flows to areas where a larger number of jobs exist and where production capacity is concentrated. In those regions, tax contributions are high because business activity is most intense, which helps fund local services and infrastructure but can also create disparities in regional wage levels.
To address this imbalance, the ministry is developing a mechanism that would base tax distribution on the size of a regional workforce and the value of fixed assets located there, rather than relying primarily on the wage fund as an indicator. This approach aims to reflect the actual economic footprint of enterprises operating through multiple subdivisions and to ensure that tax payments correlate more closely with where economic activity occurs. The department is actively preparing these changes, which would affect how regional fiscal resources are allocated and how budgets are planned at the level of local administrations.
In recent remarks, Anton Siluanov, who previously served as Russia’s finance minister, indicated that the new budget rules are designed to curb expenditures from the National Welfare Fund and to prevent the fund from being depleted. The proposed reforms are presented as part of a broader effort to strengthen fiscal stability and to balance fiscal responsibility with sustainable regional development. The ministry’s proposals reflect a broader trend toward adjusting macroeconomic policy instruments to align with actual patterns of investment, employment, and asset use across the country, including both resource-rich regions and those with growing industrial capacity.
Overall, the planned changes signal a move toward more granular tax attribution that accounts for the geographic distribution of assets and labor. If adopted, the new rules could influence regional budgeting, investment incentives, and the budgeting strategies of corporations with nationwide networks. The government appears intent on creating a fairer framework where tax contributions better mirror the real economic footprint of business activities, potentially reducing geographic disparities while maintaining prudent fiscal management across the federation.