moscow Is Offsetting the Drop in Profits with Massive Fiscal Pressure

According to the results of the first quarter of 2026, russia’s federal budget received $13.04 billion in corporate income tax, which is by 29.37% more than a year ago. The aggregate profits of russian companies during the same period fell by 20%, to $109.74 billion. The budget is growing not because businesses are earning more, but because the kremlin is taking an ever-larger share of an ever-shrinking market.

The beginning of 2025 saw low revenue due to the transition to new tax rules; revenue then gradually increased, peaking in the third quarter of 2025 at $14.35 billion. The subsequent decline and stabilization in early 2026 mean one thing: the effect of the tax reform is wearing off, while the financial condition of russian companies continues to deteriorate.

Effective January 1, 2025, the corporate income tax rate was raised from 20% to 25%, while the share allocated to the federal budget was increased from 3% to 8%. The rate of allocations to regional budgets remained at 17%. The result is predictable: moscow takes the lion’s share of the revenue growth, while the regions receive less and less. Revenues from this tax to the budgets of russian regions fell to $18.26 billion in the first quarter of 2026, – “minus” 12% year-on-year. The kremlin is establishing a vertical structure of fiscal control at the expense of its own territories, and this is a clear illustration of how the center is draining resources from the periphery through the war.

The second driver of growth – the tightening of tax administration – is operating just as aggressively. In the first quarter, the federal tax service conducted 42 on-site audits of the largest taxpayers, compared to just 13 during the same period in 2025. The amount of additional liabilities assessed as a result of those audits jumped from $15.65 million to $122.62 million – a 683% increase. This is effectively a forced extraction of money from businesses that are already losing profitability.