International companies paid $3.5 billion in profit taxes to the Kremlin in 2022, a new report by B4Ukraine and the Kyiv School of Economics (KSE) reveals. These taxes help fund Russia's war in Ukraine.
Last year, global corporations, including those who have now fully exited the Russian market, made over $213.9 billion in revenues through their local Russian businesses, of which $14.1 billion of this was profit. Over half (56%) of companies monitored by KSE are still committed to remaining in the Russian market.
Collectively, corporations headquartered in the European Union earned $75.2 billion from their Russian businesses last year and paid the Kremlin $594 million in profit taxes.
“16 months after the full-scale invasion of Ukraine, international companies– including those incorporated in G7 nations and allied countries– are still contributing billions of dollars to the Russian state through taxes paid on profits, helping to bankroll the Kremlin’s war effort,” the report notes.
Deep in Russia
Of 1,387 Western companies with Russian subsidiaries, only 241 (14%) have completely exited Russia, cutting off revenue for Russia’s war against Ukraine, which has now killed thousands of civilians and caused over $144 billion in infrastructure damage.
Some of the largest beneficiaries of Russian revenues are companies based in the United States and allied nations. US companies contributed $712 million to the coffers of the Kremlin. German companies contributed a further $402 million.
Credit: B4Ukraine
54% of corporations headquartered in Belgium have remained in the Russian market, making $595 million in revenue from their Russian businesses and paying $17 million to the pockets of the Kremlin. Belgian companies are particularly active in the pharmaceutical and healthcare sectors. 87% of companies in this field are remaining in Russia.
“Despite Russia becoming a precarious place for global brands to do business, a number have chosen to double down on their Russian activities,” the report notes. “For some, this has been a lucrative gamble.” Big Tobacco has proved to be the worst offender.
Reaping the profit
Switzerland-based “Japan Tobacco International” (JTI) made $7.4 billion in revenues from the Russian market in 2022, growing its presence by $1.5 billion compared to 2021. The company has made no plans to quit the Russian market. US tobacco giant Philip Morris will also remain in the market, making $7.9 billion last year.
Credit: B4Ukraine
For reaping bumper profits in Russia, the two companies wrote a large check for Russia’s war against Ukraine. JTI paid $193 million in profit taxes in 2022. Philip Morris equally paid $206 million to the Kremlin.
Other European companies are committed to remaining in the Russian market, feeding Russia’s tax revenues. These include French retail chain Leroy Merlin ($4.9 billion in revenue), French supermarket giant Auchan ($3.5 billion), German cash-and-carry Metro AG ($3.4 billion), and French food producer Danone ($3 billion).
“The G7 and allied countries urgently need to address the role that their unsanctioned business sectors are playing in Russia today. They should look beyond sanctions compliance to better define the expected standard of corporate conduct, encourage responsible disengagement from Russia,” the report concludes.
