FX.co ★ Russia to Raise VAT to 22% in 2026

Russia's Finance Ministry has put forward a proposal to increase the value-added tax (VAT) from 20% to 22% in 2026 as a means to finance military expenditures and address the expanding budget deficit, Reuters reported. This announcement corresponds with US President Trump's recent remarks, where he described Russia as a "paper tiger" for "engaging in aimless conflict for three and a half years" and suggested that the country is facing "significant economic challenges." President Putin indicated last week that he is considering amending tax policies during the wartime period, drawing parallels to the US strategies of increasing taxes on the affluent during the Vietnam and Korean conflicts. On Wednesday, the Russian government approved a revised draft budget for 2026. According to documents from the Finance Ministry, national defense spending is projected to decrease to 12.6 trillion roubles in 2026, down from a post-Soviet high of 13.5 trillion roubles in 2025. The deficit for 2025 is projected to be 2.6% of the national output—the highest since the conflict's onset—a figure that surpasses the initial target by 53%, according to Reuters' review of the documents.