Western sanctions against Russia do not actually operate outside of allied countries and have a very limited impact on the Russian economy.
What is known about the reasons for the low effectiveness of Western sanctions against Russia
Sanctions slow down the economy, but never stop it. Trade continues to flow, it just flows in a different way, — explains the head of Dubai's main shopping center, Hamad Buamim.
The UAE is believed to be the biggest beneficiary of Western attempts to isolate the Russian economy.
For example, some oil traders moved from Geneva to the UAE after Switzerland joined the sanctions imposed on Moscow.
Buamim emphasised that the most critical area of the economy currently remains the supply of energy resources. About 3,000 energy companies are registered in the UAE alone.
However, in recent months, the UAE and other countries have come under pressure from the US, the EU and the UK to take action against companies trading with Russia.
The fact that the economy is not controlled exclusively by one side of the world makes these sanctions less effective. If we take only the war in Ukraine, they are effective when you look at the west, but they are not very effective outside of it. We do not see them as a great tool for exerting any influence. They simply complicate trade and affect the whole world, — emphasized Buamim.
At the expense of which Russia is trying to finance the war against Ukraine
In Russia, the VAT rate for enterprises and individuals whose annual income exceeds $27,000 is increasing from 20% to 25%.
The Russian Ministry of Finance has sent government bills requiring tax reform, including increasing the value-added tax for enterprises from 20% to 25% and introducing a progressive tax on individuals' income.
According to Andrei Klepach, the chief economist of the State Development Bank "VEB," increasing the value-added tax for enterprises from 20% to 25% can add 14.2 billion dollars to the aggressor's budget.
The progressive scale of personal income tax will be calculated as follows:
for incomes from 2.4 to 5 million rubles ($27,000 to $56,000) per year — 15%;
for incomes from 5 to 20 million rubles ($56,000 to $224,000) per year — 18%;
for incomes from 20 to 50 million rubles ($224,000 to $562,000) per year — 20%;
for incomes over 50 million rubles (over 562,000 dollars) per year — 22%.
Previously, Russia had no progressive personal income tax scale, and from 2001 to 2021, it paid a single rate of 13%. In 2021, the tax was raised to 15% for individuals earning more than $56,000 annually.
The amount of personal income tax will depend on earnings. It is unknown how much money a progressive tax on individuals can bring to the Russian Federation's budget.
The Ministry of Finance of the Russian Federation reports that taxes will increase for more than 2 million Russian citizens.
