Offbeat Russia. Vladimir Putin validates the tax increase on high incomes

© ALEXEI NIKOLSKY / SPUTNIK / KREMLIN POOL / EPA / MAXPPP Russian President Vladimir Putin, on November 20, 2020, in Moscow (Russia).

The measure announced during the summer by the Russian president entered into force on Monday 23 November. It heralds the end of the single tax rate in Russia.

Russian President Vladimir Putin on Monday 23 November signed a law on the increase in the tax on high incomes, announced this summer, which represents a first stab at the single tax rate which the country has been proud.

From 2021, the tax rate will drop from 13% to 15% for income above five million rubles per year (55,350 euros at the current rate).

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Putin said support of small and medium-sized businesses hurt by the coronavirus crisis is a priority for the Russian government. “Thus, we reduce both the administrative and tax burden on tens of thousands of companies employing millions of our citizens, and support jobs and people's incomes

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This measure was announced by the President this summer at the same time as measures to support the economy damaged by the coronavirus pandemic.

The reform of the income tax, which is one of the main sources of financing of the federal budget, should bring in some 60 billion additional rubles (approximately 66 million euros), had indicated the president, specifying that this sum would be used to treat children suffering from rare diseases.

The single income tax, introduced in 2001, was one of the key reforms of Vladimir Putin's first term. Its modification has been discussed regularly for several years, the hypothesis of erasing it or reducing it for low incomes having been mentioned.

The introduction of the single tax "brought wages and income out of the shadows, simplified and made the tax administration understandable," , the president said in June.

But with "the new quality of administration, the introduction of digital technologies, it has become possible to distribute the tax burden in a more differentiated way" , he added.