Decisions to organise self-defence for Russian enterprises against attacks by Ukrainian missiles and drones open up new opportunities to improve the effectiveness of Russia’s air-defence system. At the same time, allowing businesses to engage in self-defence creates new financial, legal and even ideological problems for the authorities.
Involving the private sector in organising air defence creates promising conditions for technical and organisational innovation without the traditional departmental barriers and monopolies. It is no secret that many promising models of Russian strike drones were developed by small creative teams. Harnessing grassroots innovation in the private sector could also prove promising for defensive systems
However, private-sector financing of measures to protect businesses themselves requires new issues to be addressed in the Russian tax system. Which costs incurred by companies to establish their own air-defence systems can be included in production costs, and which self-defence expenses can only be paid out of their own profits? This is far from an academic question for Russian businesses. The overwhelming majority have no desire to come into conflict with the tax authorities or face unexpected additional tax assessments in the future.
Judging by comments from officials, the tax treatment of self-defence expenses has yet to be settled. The Russian Ministry of Finance is examining companies’ requests concerning the inability to classify certain types of spending on defensive measures as deductible expenses when calculating the corporate profit-tax base. It has promised to introduce amendments to the Tax Code that could take effect as early as 2026, Deputy Minister of Finance Alexei Sazanov said a week ago. According to him, ‘there are questions about the classification of certain types of expenses so that they can be taken into account when determining the profit-tax base’
Clarity over the permissible and impermissible level of spending by each enterprise is fundamentally important for defence planning and its ultimate effectiveness. It is one thing if a company’s defenders can purchase only light weapons for shooting down missiles and drones. It is quite another if businesses can finance several layers of air defence equipped with an advanced network of remote sensors, data exchange and target designation for each defensive layer. At the same time, it is important to recognise that tax objectives are directly at odds with the effectiveness of future corporate defences
The conflict between tax priorities, business interests and overall economic activity is hardly new. Even ordinary citizens understand that if tax authorities call the shots in a country, economic problems may follow. Raising taxes too sharply can deprive companies of funds for development and investment. The most obvious recent example is the reversal in Russia’s tax policy after the authorities overreached in an attempt to collect more taxes from small businesses. It took the state apparatus almost a year to recognise this tax-policy mistake. The initiative to raise taxes emerged among officials in summer 2025, while the law freezing the revenue threshold for small businesses for tax purposes was signed only in summer 2026. In peacetime, such a slow response by the state to its own mistakes may be more or less acceptable. But amid constant attacks on Russian enterprises, such a pace of decision-making could prove too slow.
Another important question is which businesses should be allowed to engage in self-defence and which should not. There are no simple answers here either. Why should an oil company be allowed to build its own air-defence system while, for example, a tourist facility should not? And why should individual citizens be allowed, or not allowed, to build their own air defences over their homes?
ORIGINAL:NG/Corporate Self-Defence Raises a Host of Financial Questions
