Putin will raise additional money for the war thanks to the fall of the ruble: Russia sets new tax for exporters

The Russian government has decided to impose duties on most Russian exports starting October 1, with rates tied to the ruble and helping to boost the Russian budget. The relevant decree was published on the website of the Russian Cabinet of Ministers, the Russian edition of Forbes reports.

According to it, if the dollar in Russia costs 80 rubles or less, the export duty will be zero. If the exchange rate is higher than this threshold, the duty will range from 4% to 7%, depending on the exchange rate. As for fertilizers, the duty will be up to 10% depending on the exchange rate.

The additional duties will be in effect until the end of 2024. The Russian government explains that they are meant to protect the domestic market from rising prices.

The duty will increase for every 5 ruble increase in the exchange rate. At an average exchange rate of more than 80 but less than 85 rubles to the dollar, the duty will be 4%, at an exchange rate in the range of 85-90 rubles – 4.5%, and at an exchange rate in the range of 90-95 rubles – 5.5%. If the exchange rate exceeds 95 rubles, the duty will be 7%.

As a result of trading on the Moscow Stock Exchange on Thursday, the ruble dropped to 95.91 rubles/$.

The new duties will not apply to the export of Russian oil, oil products, gas, timber, scrap metal and grain, but they will cover metals, coal and fertilizers, the largest items of Russian non-oil exports.

According to Russian media, the initiative to introduce the new duty came from the Russian Ministry of Finance: according to its estimates, the budget lacks 500-700 billion rubles, which is to be collected from exporters.

As reported, Russia’s federal budget expenditures have increased significantly due to the need to finance the war in Ukraine and the occupation of Ukrainian territories. Because of this, the Kremlin is looking for additional sources of budget revenues.

In particular, in August, Russian President Vladimir Putin signed a law establishing an additional 10% tax on “excess profits” for large companies in previous years (windfall tax), which is expected to raise an additional 300 billion rubles from businesses.

Tags: Russia, export, fertilizers