The Russian government has introduced a series of tax increases and spending adjustments in its 2027–2029 budget to address a deficit and fund military operations in Ukraine. The lower house of parliament, the State Duma, passed the first of three required votes on the budget on Thursday, October 29, 2026. The deficit hit 5.8 trillion rubles ($72 billion) through August, a figure almost 50% higher than at the same point last year.
The new measures target specific economic sectors and higher-income individuals following broader tax hikes implemented last year. The government attributes fiscal strain to increased military spending, sanctions, labor shortages, and high interest rates for non-military firms. Additionally, Ukrainian strikes on oil refineries and export terminals have impacted energy infrastructure. Finance Minister Anton Siluanov reported that the revised deficit for this year will reach approximately 3% of gross domestic product (GDP).
Key provisions in the legislation include a windfall profits tax of 20% to 30% on mining companies producing iron ore, nickel, and gold. Individual tax rates on interest, dividends, and property sales will rise to a range of 13% to 22%. Furthermore, a subsidiary of German retailer Metro was seized under laws governing firms from "unfriendly countries," with the subsidiary directing a one-billion-ruble ($12 million) contribution toward military equipment, including anti-drone technology and vehicles.
The deficit has already exceeded the government's revised 4.8 trillion ruble target. Analysts at the Kyiv School of Economics report that Russia's liquid assets in its National Wealth Fund—primarily gold and Chinese currency—have dropped to 1.7% of GDP. The school suggests that without these tax increases or potential cuts to social spending, the country could exhaust its financial buffers by early 2028. Chris Weafer, CEO of Macro-Advisory Ltd., says the shift marks a transition where the budget is primarily funding the military and military operations while civilian needs and normal economic development receive less funding.
The next steps for the budget involve two additional votes in the Duma before it can be finalized. The new taxes on investment income and foreign online purchases are scheduled to take effect on January 1, 2027. While the government currently maintains record-low unemployment and low debt levels, the Kyiv School of Economics warns that the stability of the financial system remains vulnerable to external shocks, such as a decline in global energy prices. Foreign investors from "unfriendly countries" will also face a 35% tax on dividends paid into restricted accounts.