US businesses were largest tax contributors to Russia among international companies in 2022: report

U.S. companies in Russia were the largest tax contributors to the Russian government among corporations based in any other country last year as Moscow’s war in Ukraine progressed, according to a new report. 

The report from B4Ukraine, a coalition of civil society groups working to cut off Russia’s ability to continue the war, and the Kyiv School of Economics found American firms paid $712 million in taxes in Russia in 2022, having brought in the largest total revenue of any foreign country. 

The report states that the companies that continue to be present in Russia and thus pay taxes are indirectly financing the war in Ukraine and the “severe breaches” of human rights and humanitarian law that have been happening in the conflict. 

Global corporations, including those that left the country since the full-scale invasion began last February, made more than $213.9 billion in revenue through their local Russian businesses, including $14.1 billion in profits, and paid $3.5 billion in taxes in 2022. The tax projection is likely a significant underestimate of the total amount that has been paid, the report states. 

German firms were the second-largest tax contributors to Russia, paying $402 million in taxes on profits last year. 

The industries that received the largest amount of revenue from their businesses in Russia were alcohol and tobacco, fact-moving consumer goods and automobiles. 

Companies with headquarters in the Group of Seven (G7), a group of the world’s seven largest democratic economies, and the European Union were the highest-profit taxpayers in Russia and made up 16 of its top 20 contributors. 

The report states that companies often argue that their products are essential as a defense for staying in Russia amid the war. But the authors argue that the companies often stretch the definition to include products like shampoo and pastries. 

The report states many companies declined to tell B4Ukraine which products of theirs are considered essential. 

Hundreds of U.S. companies left Russia soon after the war began, but many have also chosen to stay. 

The authors lay out several recommendations for governments and companies to take action to cut the indirect financial support for Russia’s war. 

They said governments of the G7 and its allies should look beyond companies complying with sanctions to create a clearer standard for businesses’ conduct and promote ethical business practices in line with internationally accepted human rights principles. They should also create financial penalties and restrict companies’ access to contracts if they continue to remain in Russia, according to the report. 

The report calls on firms operating in Russia to immediately cut ties to the country, clearly define the criteria for determining that their products are essential for the Russian people and demonstrate public support for Ukraine.

The report came ahead of the 500th day of the war on Saturday.