Russia plans to increase the VAT (Value-Added Tax) by two percentage points in 2026, a move expected to reduce banking sector profits by up to 9%, or an estimated 277 billion roubles ($3.4 billion) in lost profits for banks overall. This tax hike and the removal of certain tax breaks come despite Russian banks posting record profits, fueled by the country’s overheating wartime economy, which has drawn criticism regarding excessive profiteering. However, the broader banking sector already expects a profit decline this year as the central bank aggressively raised interest rates to 21% to combat high inflation. While facing these sector-wide challenges, Sberbank, in particular, anticipates a profit increase of 6-7% and will continue its policy of paying half its profits as dividends to the state.
Source: reuters.com
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