Russia economy: Moscow has already collected $387M in company ‘exit taxes’ this year

Angle down icon An icon in the shape of an angle pointing down. Russian President Vladimir Putin. Getty Images Foreign companies exiting Russia have paid $387 million to the country’s budget for far this year.Russia has made it tough for firms to leave the market.Russia’s economy has remained driven by defense and government spending.

Foreign companies exiting Russia are boosting Moscow’s finances — but not by choice.

Departing companies had already paid 35.7 billion rubles, or $387 million, to Russia’s budget as of March 15, Russia’s RBC Daily reported on Wednesday, citing official data.

RBC reported that the sum was 17 times the 2.1 billion rubles Russia had expected for the whole of 2024. The report doesn’t say how many companies have left this so far this year.

Russia collected 116.5 billion rubles from departing companies in 2023, the outlet reported.

Thousands of foreign companies pledged to leave Russia after it started the war in Ukraine. But as of Wednesday, just 373 of them had made a complete exit since the war started, according to a count by the Kyiv School of Economics. Another 500 companies are in the process of withdrawing from the country, while another 704 companies have suspended their operations.

As Business Insider reported in December, many of the biggest household names — companies such as McDonald’s, Starbucks, and Ikea — have already left Russia. After an initial rush of exits at the beginning of the war, companies have been pulling out of Russia at a much slower pace.

That’s intentional on the Russian government’s part: Moscow has been making it increasingly difficult for foreign companies to leave.

For a start, companies that wish to leave must be approved by the government. Companies operating in strategic sectors, such as energy and banking, need President Vladimir Putin’s personal sign-off.

The Russian government has also introduced a series of steep hurdles to the exit process, such as demanding companies sell their assets at a 50% discount and pay at least 10% of their sale proceeds to the federal budget. Washington has called such payments “exit taxes.”

That means companies make a significant contribution to the Russian economy on their way out. The problem is that remaining in Russia also means contributing to Russia’s resilient wartime economy.

Russia’s GDP grew 3.6% in 2023. The International Monetary Fund expects its economy to grow 2.6% this year. Unemployment is around a record low, and wages are soaring.

But defense and government spending has driven much of Russia’s economic growth, which means it may not be translating to affluence for many Russians on the ground dealing with inflation, which was running hot at 7.7% in February.

Among the major foreign companies still operating in Russia are Nestlé, Unilever, and Mondelez.