Kremlin taps corporate profits to fund war efforts in Ukraine
The Kremlin is seeking additional sources to supplement the state budget strained by the war in Ukraine. The lower house of the Russian parliament, the State Duma, passed a law on Tuesday that raises the corporate tax from 20% to 40%. Transneft has already announced that it will be forced to cut investments.
Vladimir Putin is once again reaching into the pockets of state-owned companies to patch the state budget strained by the war in Ukraine. This time, he has ordered an increase in the tax on profits of the state-owned oil pipeline operator, Transneft.
According to "The Moscow Times," at the president's request, the lower house of the Russian parliament, the State Duma, passed a law on Tuesday raising Transneft’s corporate tax rate from 20% to 40% for the years 2025-2030.
Such a substantial burden could lead to the pipeline operator's loss of financial liquidity, as the company stated that only one-quarter of its profits would be allocated to internal needs.
Transneft immediately announced that it will be forced to cut investments following the decision. This, in turn, implies reduced funds for maintaining oil pipelines, oil depots, and fuel tanks.
"After a thorough analysis of production, economic, and geopolitical factors, experts predict an inevitable and significant reduction in Transneft’s investment programme by 2026," the company stated in a declaration quoted by "The Moscow Times."
The operator also warned of the "negative impact" on related sectors, especially fuel and energy. Starting December 6th, Transneft announced a 13.8% increase in fees for transporting oil products. It also proposed increasing tariffs until 2030 to "ensure stable and reliable operations."
State-owned Transneft operates a pipeline network measuring approximately 67,592 kilometres, transporting crude oil and fuels to maritime terminals.
