Russian President Vladimir Putin signed a law on the tax on excess profits of large companies. The document is published on the official Internet portal of legal information and will enter into force on January 1, 2024.

The payment will be one-time and will affect organizations whose profit for 2021-2022 exceeded 1 billion rubles before tax. As Finance Minister Anton Siluanov said earlier, part of this money earned by business is planned to be spent on fulfilling the priority obligations of the state. First of all, we are talking about the implementation of social spending.

"By agreement with the social bloc, we will direct these resources to support families with children. On the decisions that were made last year on targeted and targeted support for families in need," Siluanov stressed.

According to the Ministry of Finance, companies created after 2020, small and medium-sized businesses, as well as organizations that pay a single agricultural tax will be exempt from paying the contribution. In addition, the new law will not apply to enterprises in the energy industry, since additional tax exemptions for mineral extraction tax and fuel damper are already provided for them in 2023.

Moreover, the initiative will not affect companies that did not have sales revenue in 2018-2019, as well as developers who build facilities with the involvement of citizens' funds through escrow accounts. The contribution will not have to be paid to financial institutions to which bankruptcy prevention measures are applied.

  • © 0shi

For all other large enterprises, the tax rate will be 10% of the amount of excess profit for 2021-2022 over the same indicator for 2018-2019. The fee will need to be paid no later than January 28, 2024, and the business must calculate its size independently.

"The amount of tax can be halved to an effective rate of 5% if you transfer a security payment from October 1 to November 30, 2023 ... It is proposed to implement such a solution through a tax deduction," the Ministry of Finance noted.

"Let's throw in and pay"

The authorities began to discuss the idea of collecting a one-time additional payment to the treasury from large companies in the country with business back in February 2023. The need for such support from entrepreneurs arose against the backdrop of an increase in the budget deficit.

"The initiative is due to the fact that due to sanctions, Russia began to receive less oil and gas revenues to the budget. While the country is redirecting energy exports from the West to the East and South, it was decided to make up for the temporary gap in revenues from other sources, including a one-time tax for large enterprises. In 2022, many of them received super profits due to a sharp jump in commodity prices associated with the geopolitical aggravation in the world and the consequences of the coronavirus pandemic, when supply chains were disrupted due to lockdowns, "Natalia Milchakova, a leading analyst at Freedom Finance Global, explained to RT.

According to the latest estimates of the Ministry of Finance, from January to June 2023, the federal budget of Russia was executed with a deficit of 2.6 trillion rubles. State treasury revenues decreased by almost 12% compared to the same period in 2022 and amounted to 12.4 trillion rubles, while expenses increased by about 20% to 15 trillion rubles.

Such an increase in budget spending in the ministry is explained by the fact that some expenditure items were rapidly financed at the beginning of 2023. At the same time, non-oil and gas revenues of the treasury increased by 18% in annual terms (to 9 trillion rubles), and revenues from the sale of energy resources decreased by 47% (to 3.4 trillion rubles) after the fall in oil prices and a reduction in gas exports.

It is noteworthy that at the moment the cost of Russian oil has already won back a significant part of the sanctions losses and has risen significantly above the ceiling set by the West. Nevertheless, against the backdrop of the difficult situation with the budget at the beginning of the year, big Russian business itself turned to the state with the idea of supporting the treasury. This was previously stated by First Deputy Prime Minister Andrei Belousov.

"They understand that they have colossal windfall profits for 2021 and 2022. Giant simply. More than the budget. They say: "Guys, than we raise taxes, let's better chip in and pay," and then the nuances began, who how much, "Belousov said in an interview with RBC.

  • © nuttapong punna

In response to the business initiative, the government voiced its own ideas. At the same time, as Anton Siluanov noted in an interview with RT, in their proposals the authorities "proceeded from the principle of justice."

"Over the past few years, we have seen a fairly high level of market revenues for entire business areas. The state offered these companies to transfer part of the rental and opportunistic excess profits to the budget in the form of a tax. At the same time, we proposed to take the increase in business income for the period 2021-2022 and correlate this amount with the period 2018-2019, bypassing the covid 2020, because it was irrelevant. We proposed to partially centralize the difference between the volume of revenues in the budget for state needs, "Siluanov explained.

According to him, in total, due to a one-time contribution, the country's leadership intends to attract about 300 billion rubles to the budget. Although this is a relatively small amount compared to the total treasury revenues (26 trillion rubles), it nevertheless remains significant for financing social programs, the minister stressed.

According to Natalia Milchakova, first of all, the tax will affect large companies from industries such as electricity, metallurgy and the production of mineral fertilizers. At the same time, according to the interlocutor of RT, the initiative is unlikely to become a serious burden on business, since enterprises will deduct a contribution not just from profits, but from excess profits received as a result of geopolitical reasons. Dmitry Scriabin, portfolio manager of Alfa Capital Management Company, does not see any cause for concern for organizations.

"The introduction of this tax will not affect the work of the business in any way. The amounts are quite feasible and, according to our estimates, do not exceed 5-10% of the net profit of companies for the current year, "Scriabin said in a conversation with RT.