An “extraordinary” tax is being prepared for Russian business

Officials came up with a new way to replenish the treasury

The story of the “one-time tax collection”, which the government has been wanting to shake off from big business for more than a month to plug holes in the budget, is acquiring new details. According to leaks from companies, the Ministry of Finance proposed introducing an “emergency tax” and enshrining it in the Tax Code. It can actually be deducted retroactively: now – from the funds earned by companies for 2021-2022. True, the most profitable industries will not suffer – domestic raw material enterprises have already received serious monetary damage in connection with the sanctions.

Initially, it was about the collection, which in the world is called Windfall tax. Literally, these mean “taxes on income brought by the wind” or “taxes on unexpected luck.” According to economic concepts, such an additional fee is levied on the most profitable companies when their revenues significantly exceed the annual average.

In the case of Russian legislative innovations, which officials are going to enshrine in the Tax Code, the rules of the game are changing dramatically. According to sources, oil and gas, coal and processing enterprises, as well as companies from small and medium-sized businesses will be exempted from payment.

Who, then, will fall under the government’s new tax pressure? A one-time fee to the budget can be extended to all companies with a net pre-tax profit of more than 1 billion rubles. At the same time, it is proposed to set the tax rate at 10% of the amount of excess profit for 2021–2022. over the same indicator for 2018-2019.

The introduction of such taxes, of course, is unlikely to be disputed by anyone, says Alexei Zubets, director of the Institute for Socio-Economic Research of the Financial University under the Government of the Russian Federation. The government can improve the instruments of any fiscal burden that commercial organizations will have to put up with.

But we must not forget that these fiscal fees are charged “backdating”. The money earned by Russian exporters in 2021-2022 has already been spent. Including used for budgetary purposes. Not all companies that earned excess profits in past years will be able to receive similar revenue in the current times.

Now companies that previously provide the lion’s share of federal revenues are beginning to lose foreign partners due to sanctions and other trade obstacles and are trying to rebuild their supply chains.

“The owners of companies that until recently served as a donor to the federal treasury can tell officials: we helped you, now help us. The collection of increased taxes by the state after the expiration of the tax period is an ugly act in relation to the main state profitable enterprises.

It remains to be hoped that such an action will become a one-time fiscal function. Moreover, the majority of large Russian holdings participate in social projects, the costs of which should also be taken into account by state economic departments, ”the expert believes.

However, tax pressure on private business continues to tighten. “If a legal framework is created in Russia to organize one-time “emergency taxes” under certain circumstances, then they will apply to all domestic business,” suggests Natalia Milchakova, a leading analyst at Freedom Finance Global. — From the windfall tax, the government of our country planned to receive additional income in the amount of 400 billion rubles this year. Most likely, the income will be higher.

It is still impossible to calculate how much further the state will receive from emergency taxes: much will depend on which industries will be exempted. From the looks of it, these emergency taxes will prove to be “creative” and will vary from case to case.”