Progressive taxation of dividends: The dynamics of fiscal effects and risks in 2022–2028

The transition to a progressive scale of personal income taxation in Russia has affected not only labor but also investment income. The newly created preferential tax regime for dividends has sparked considerable debate and divergent views on achieving a balance between tax equity for ultra-high incomes and maintaining an attractive investment climate. The aim of our study is to assess the fiscal effects of the recent dividend tax reform and to identify the long-term effects and risks associated with various scenarios for its further adjustment, drawing on international experience. An econometric model for evaluating the fiscal consequences of the shift to progressive dividend taxation is constructed based on an analysis of data on declared dividend income and tax revenues across the constituent entities of the Russian Federation. The scientific novelty of the research lies in synthesizing the results of our study of international mechanisms for preferential dividend taxation to identify sources of potential risks and systemic vulnerabilities that should be considered when developing proposals to improve dividend tax policy. The paper systematically categorizes and critically analyzes international practices and empirical research on possible approaches to dividend taxation, while also assessing the fiscal implications of their potential implementation for the Russian budget. We identify directions for optimizing the personal income taxation of dividends, taking into account the need to adhere to the principles of tax neutrality and equity. The research pays particular attention to the risks associated with the development of tax avoidance schemes. This provides the basis for further building analytical models to identify constituent entities of the Russian Federation with the possible use of “dividend-based” tax avoidance strategies by individual entrepreneurs.