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US, German companies lead in tax payments to Russian budget – report

US, German companies lead in tax payments to Russian budget – report
Western companies who remained in Russia contributed $3.5 bn in taxes to the Russian budget — nearly a quarter of all tax revenue. Leading the list are alcohol and tobacco companies and fast-paced consumer goods; companies say their products are “essential”

Almost a quarter of all profit tax paid in 2022 was contributed by companies headquartered in G7 nations, according to a report of the Kyiv School of Economics and B4Ukraine, a global coalition of NGOs lobbying international businesses to leave the Russian market.

Western companies continue contributing billions of tax dollars to the Kremlin, enabling Russia’s war of aggression against Ukraine. In 2022, global corporations — including those that have exited since the war — made over $213.9 billion in revenues through their local Russian businesses and paid $3.5 billion in profit taxes, the report says.

B4Ukraine reports that a majority of Western companies, 56%, remain committed to conducting business in Russia, while only 44% have exited the country.

US companies, in particular, generated more revenue and paid more in profit taxes to the Russian government than any other country, paying a total of $712 million. 44% of US companies that had a presence at the start of the full-scale invasion remain in Russia.

Other significant contributors included Germany, Switzerland, Japan, and the UK. For example, German companies paid $402 million in profit tax to Russia in 2022; Swiss businesses contributed $275 million to the Russian budget.

B4Ukraine

The three top companies by revenue in Russia in 2022 are the American tobacco company Philip Morris and Japanese Tobacco International, followed by France’s Leroy Merlin. They are followed by such giants as Pepsi (USA), British American Tobacco (UK), Veon (The Netherlands), Auchan (France), Metro AG (Germany), Danone (France), and Hyundai (South Korea).

Compared with all EU countries, German paid the most taxes to the Russian budget. Prior to the Russian invasion of Ukraine, 371 German companies were operating within Russian borders. By July 2023, 262 German companies continued their operations in Russia, which is 70%, according to Bild.  

Such German companies as Siemens, Daimler, and Wella have left Russia since the start of the full-scale war against Ukraine. 

At the same time, such businesses as Metro, Bayer, BMW, Hochland, Robert Bosch, Knauf Gips, and others keep operating in Russia and paying taxes to the country’s budget. According to B4Ukraine, some of the remaining German companies took advantage of the departure of competitors and increased their turnover.

According to Bild, it is still legal for EU companies to do business with Russia. Only certain goods and services are banned, including auditing, IT consulting, imports, and purchases of oil, jewelry, and goods for the aerospace industry.

B4Ukraine

As per the B4Ukraine report, some of the remaining companies in Russia have increased their turnover by capitalizing on the exit of their competitors. Alcohol and tobacco companies are in the first place. Besides, Austria’s embattled Raiffeisen Bank International (RBI) and the American snacking business Mondelez International are among those foreign firms that managed to benefit the most from their Russia operations in 2022.

The report also highlights the fast-moving consumer goods sector (FCMG), which generated over $21 billion in revenue from Russia in 2022. This sector includes major global brands such as Danone, Pepsi, Procter and Gamble, and Unilever.

In their public statements, these companies often cite the “essential” nature of the goods they supply as a justification for their continued sales and revenues in Russia. However, the report criticizes this reasoning, stating that these companies often don’t want to disclose the criteria by which they decide on the so-called “essentiality.”

The report concludes with a call to action: “All Western companies that have not left the Russian market since the full-scale invasion of Ukraine began 16 months ago are complicit in the Putin regime’s war crimes and crimes against humanity. The only responsible course of action is to exit the Russian market and stop enabling its war against Ukraine.”

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