The Russian invasion of Ukraine in February 2022 triggered a mass exodus of multinational corporations, with giants like McDonald’s, Apple, and Ikea swiftly withdrawing their operations. However, a significant number of companies chose to remain, often justifying their decision by citing the essential nature of their products and services for the Russian civilian population. This divergence in corporate response has sparked considerable debate, raising ethical and economic questions about the responsibilities of multinational corporations during times of international conflict.
One of the companies that remained in Russia is Philip Morris International (PMI), the owner of Swedish snus manufacturer Swedish Match. According to a report from the Kyiv School of Economics, PMI paid the equivalent of nearly 2.5 billion Swedish kronor in taxes to Russia in 2023, making it the largest foreign corporate contributor to the Russian state coffers. This revelation has drawn criticism, particularly given that early in the conflict, PMI had indicated its intention to scale back operations and pause investments in Russia. However, by February 2023, PMI CEO Jacek Olzak reversed course, stating that the financial impact of a complete withdrawal would be too substantial.
The Kyiv School of Economics report also highlighted other major American corporations that continued to operate and pay taxes in Russia. PepsiCo contributed over 1.5 billion kronor, chocolate manufacturer Mars paid over 1 billion kronor, and Mondelez, the owner of Marabou, added approximately 700 million kronor to the Russian treasury. These figures underscore the substantial financial flows from Western companies into Russia, despite the ongoing conflict and international sanctions. The continued presence of these companies raises complex questions about the balance between corporate responsibility, financial considerations, and the potential contribution to a belligerent state’s economy.
A separate study by Yale School of Management revealed that 123 large American companies remained in Russia almost three years after the war began. The Kyiv School of Economics report expanded this analysis to include smaller American firms, concluding that a total of 328 US companies contributed an estimated 13.5 billion kronor in taxes to Russia during 2023. This data paints a more comprehensive picture of the continued American corporate presence in Russia and the financial benefits accruing to the Russian government.
Beyond American companies, the Kyiv School of Economics report identified German firms as the second largest group of foreign tax contributors, collectively paying 7.8 billion kronor. Austrian companies followed closely behind, with a combined tax contribution of 6.5 billion kronor in 2023. The continued involvement of these European companies further complicates the international response to the conflict, highlighting the diverse economic interests at play and the challenges in achieving a unified front against Russia.
The substantial financial stakes involved are further underscored by the fact that foreign companies still hold assets worth trillions of kronor within Russia. Recent legislation introduced by the Russian government, including a 15% ”exit tax” on profits for companies seeking to divest their Russian holdings, has created additional barriers to withdrawal. This ”exit tax,” as reported by Foreign Policy, effectively penalizes companies for leaving Russia, making it even more costly to disengage from the Russian market. This legal and economic environment further incentivizes companies to remain in Russia, despite the ethical and reputational risks associated with doing business in a country engaged in an internationally condemned war. The situation presents a challenging dilemma for these companies, forcing them to navigate a complex landscape of competing pressures, including financial considerations, legal obligations, and ethical responsibilities.
