Russia plans new tax on electronics to boost its defence capacity

MOSCOW (Reuters) -Russia is planning a new tax on electronics, primarily imported and consumer items, with $2.7 billion in proceeds earmarked to support the domestic electronics industry, including in the defence sector, over the next three years.

After sanctionsblocked Russia's access to Western chips and other essential hardware, domestic producers have struggled to meet the defence sector's demand for hardware needed to build drones and other advanced weaponry.

The lack of modern electronics hardware has also hindered Russia's efforts to stay competitive in the race with the United States, China, and others in developing artificial intelligence, which requires significant computing power.

HIKES IN VAT, TAXES ON SMALL BUSINESSES

The new tax comes on top of other measures, such as hikes in value-added tax (VAT) and taxes on small businesses, planned for 2026 to balance the state budget amid high military spending and declining energy revenues.

The new tax will take effect in September 2026. The list of items that will be taxed has not yet been finalised and published.

"It is necessary to understand that the electronics industry is a strategic sector in which import substitution is critically important, including for ensuring the country's defence capability," said Deputy Finance Minister Alexei Sazanov.

"In the context of the current external restrictions that limit access to high-tech products, import substitution becomes a key task for the state," Sazanov told members of parliament during the debate on the draft budget.

The government will first target imported smartphones and notebooks, then expand the tax to their imported components. Government officials earlier said that the proceeds will go to special funds tasked with supporting domestic producers.

($1 = 80.95 roubles)

(Reporting by Darya Korsunskaya; Writing by Gleb Bryanski; Editing by Conor Humphries)