Page 110 - RusRPTApr23

Unclassified defence spending in the first months of 2023 also doubled compared to the same period in 2022, from 256 to 501 billion rubles. If you add them to national security spending (316 billion rubles, an increase of 7.5%), they will take third place in the structure of budget spending after closed items and social spending (1.3 trillion rubles - a drop of 17.3%).
According to Bloomberg estimates, budget spending on education (361 billion rubles, an increase of 42.6%) and healthcare (328 billion rubles, an increase of 28.6%) also increased during the reporting period. But their share in budget expenditures has declined, calculations show. In total, in January-February 2023, federal budget spending increased by 52%.
The main driver of the rise in budget spending is spending on the purchase of military uniforms, the payment of salaries to the mobilized and a sharp increase in investment in large infrastructure projects on the eve of the expiration of Putin's current presidential term in the spring of 2024, Alexander Isakov, an economist at Bloomberg Economics for Russia and Central and Eastern Europe, listed. But the upcoming elections will also have the opposite effect - in order not to let inflation out of control, the government will try very hard to keep the budget deficit below 4% of GDP, Isakov said. The official deficit plan stipulated by the budget law is 2% of GDP.
The government assures that the explosive growth of budget expenditures is a temporary "paper" phenomenon and the situation will improve by the end of the year. But this is unlikely to affect military spending - even Dmitry Peskov at private parties says that the war will last for a very long time.
The Ministry of Finance and the Ministry of Foreign Affairs on March 17 proposed to the President to suspend double tax treaties (DTAs) with all "unfriendly" countries.
This is a response to the EU decision to include Russia in the black list of tax jurisdictions, follows from a message on the website of the Ministry of Finance. “If the proposal of the Ministry of Finance and the Ministry of Foreign Affairs is supported, the application of reduced withholding tax rates (tax exemptions) in relation to income that is subject to double taxation agreements will be suspended,” the agency said.
Now Russia has agreements on the avoidance of double taxation with 81 countries. About 40 of them may be suspended, including the DTT with Malta, Cyprus, Luxembourg, the USA, the UK, Switzerland, Japan and Singapore. The action of the agreements is proposed to be suspended from the moment the presidential decree is signed and “until the violated rights of Russia are restored.”
DTTs allow legal entities and individuals who are tax residents of one country, but receive income in another country, to pay tax on it only in one country or in
110 RUSSIA Country Report Russia April 2023 www.intellinews.com