U.S. companies that have continued to do business in Russia have contributed more than $1 billion in tax revenue to Kremlin, Newsweek has learned.
American firms in Russia paid the country $1.2 billion in profit taxes in 2023, according to figures from campaign group B4Ukraine and the Kyiv School of Economics (KSE) Institute shared exclusively with Newsweek. This tax contribution makes the U.S. the largest contributor of foreign profit taxes to Russia, something a former top U.S. diplomat called “shameful.”
Since Russia invaded Ukraine on February 24, 2022, companies around the world left the country to voice their moral opposition to the conflict and to put economic pressure on Russian President Vladimir Putin’s regime.
However, many remained. Research from the Yale School of Management’s Chief Executive Leadership Institute (CELI) estimates that 123 large U.S. companies continue doing business with Russia, with various levels of involvement. KSE Institute, which factors in mid-size and smaller firms, too, estimates that about 328 U.S. companies remain in Russia.
According to the new research, the 10 companies that paid the most profit taxes to Russia in 2023 were tobacco company Philip Morris International ($220 million), beverage corporation PepsiCo ($135 million), confectionary company Mars ($99 million), health and hygiene consumer goods firm Procter & Gamble ($67 million), confectionary company Mondelez ($62 million), investment bank Citigroup ($53 million), agricultural company Cargill ($50 million), pharmaceutical firm Johnson & Johnson ($42 million), independent soft-drink bottler Coca-Cola Hellenic ($34 million) and oilfield service company Weatherford ($32 million).
Philip Morris International (PMI) said it suspended planned investments and scaled down its manufacturing operations in Russia when war broke out. But in February 2023, the company’s CEO, Jacek Olzak, told the Financial Times that he was unwilling to sell the business on Kremlin terms because of the financial hit it would entail.
Mondelez has remained in Russia, arguing that investors did not “morally care” whether companies continued to do business there.
Coca-Cola stopped selling its drinks to Russia but the bottler in the region, Coca-Cola Hellenic, sells a product called Dobry Cola via Multon Partners. Coca-Cola has a 21 percent stake in Coca-Cola Hellenic. Coca-Cola reportedly applied to re-register its trademarks in Russia in April 2024.
Meanwhile, PepsiCo, Mars, Procter & Gamble (P&G), Cargill and Weatherford scaled back their business but continued to produce goods and run operations it deemed essential, according to the companies.
In September 2024, Citigroup announced it was winding down operations in Russia. A Citigroup spokesperson said: “We are actively ending nearly all of our institutional banking business in Russia, except for those operations necessary to fulfill remaining legal and regulatory obligations, while we proceed with the closing of our Russian consumer banking business.”
Newsweek contacted the Kremlin and the other companies referenced for comment.
Dr. Michael McFaul, a Stanford University academic who also served in the Obama administration, including on the National Security Council and as U.S. ambassador to the Russian Federation, called U.S. companies “shameful.”
“It is absolutely shameful that American companies have chosen to stay in Russia and subsidize Putin’s barbaric war in Ukraine,” he told Newsweek. “I hope shareholders in these companies will get more active in reconsidering the wisdom and morality of financing the slaughter of Ukrainian civilians. It’s not too late to do the right thing.”
Some of the companies’ tax contributions to Russia appear to have offset their humanitarian donations to Ukraine, B4Ukraine found.
PMI has pledged $10 million in aid to Ukraine, $210 million less than the $220 million it contributed in profit taxes in 2023.
B4Ukraine said that Mars provided $22.5 million in aid to Ukraine, while it paid more than four times that amount in profit taxes.
American companies’ $1.2 billion tax bill is up from the $915.7 million they collectively paid in 2021. This is despite a decline in combined revenues from $50 billion in 2021 to $30.5 billion in 2023.
Mark Temnycky, a non-resident fellow at the Atlantic Council think tank’s Eurasia Center, called on Congress to “impose stiffer financial penalties” on U.S. companies that remain in Russia, arguing that they “boost the Russian economy,” enable Moscow to purchase weapons and military equipment and undermine “the impact of international sanctions.”
“It indirectly rewards Russia for its invasion of Ukraine as it implies that invading another country is normal and that business can remain,” he told Newsweek.
“Shutting down additional Western and American businesses within Russia would generate less revenue in the Russian market, and it would weaken the Russian economy. Russia would then have fewer funds to purchase weapons and defense equipment for its war, and this would lead to a quicker end to the invasion as Russia would no longer have the economic means necessary to finance the war.”
Hilary Ingham, professor in economics at the University of Lancaster in the U.K., said that U.S. companies may be shoring up Russian support for the war by giving its citizens access to Western goods.
“It is conceivable that popular support for the war amongst Russians might be severely hampered if they are unable to purchase U.S. goods,” she told Newsweek.
Aside from the U.S., the second-largest contributor of profit tax to the Kremlin in 2023 was Germany as companies paid $693 million in tax to Russia. Austria came in third, with firms paying Putin’s regime $579 million in profit taxes.
Despite pressure, leaving Russia is not without its problems. The Russian government charges companies that leave the country a 15 percent exit tax and are forced to sell their assets at a 50 percent discount. The exit tax generated $385 million for the Kremlin between January and March 2024.
A further financial headache for firms who wish to exit the country is coming. In 2025, the corporate profit tax rate will increase from 20 percent to 25 percent, according to the Russian Tax Code.
Dani Belo, an assistant professor who teaches international relations at Webster University in Missouri, argued that U.S. businesses’ relationship with Russia was “normal.”
“This dual reality of fighting with an adversary but also doing business with them is a normal characteristic of international relations,” he told Newsweek. “Considering how interconnected our world has become, ultimately this trade in the midst of conflict is not a phenomenon which should surprise us.”
While U.S. companies wrangle with how to manage their affairs in Russia, the war between Russia and Ukraine drags on. On the night of December 31 into January 1, Russia launched a drone attack on Ukraine, killing a married couple. Russia lost more than 1,000 troops on January 1, according to the Ukrainian Defense Ministry.
U.S. President-elect Donald Trump, who takes office on January 20, has repeatedly indicated that he could end the war within a day.
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