Russian blogger Yelena Blinovskaya took center stage at the VTB Arena in Moscow on April 26 to encourage thousands of entrepreneurs attending a business forum to chase their dreams -- not money -- if they want to be financially successful.
“If you just want to make money, it will never work,” Blinovskaya, dressed in a pink costume and high heels, told the crowd, sharing with them how her desire years ago to spend a night in a 300,000-ruble-a-night ($3,800) Paris hotel room helped propel her toward success.
The 41-year-old mother of four is among the most popular motivational speakers in Russia, earning millions of dollars a year from her four-week Marathon Of Dreams course, television show, and guest appearances.
Her wealth and fame -- on lavish display on her social media pages -- have attracted the attention not only of millions of Russians hoping to follow in her footsteps but the Russian tax authorities as well. A day after her presentation at the VTB Arena, Blinovskaya was trying to cross the border into Belarus when she was detained by police on suspicion of evading more than 900 million rubles ($11.3 million) in taxes.
She is now at least the third popular Russian blogger to have been accused of tax evasion since last year while dozens more are reportedly under investigation.
After years of turning a blind eye to the growing wealth of some bloggers who command a wide audience, Russian authorities may now be targeting them as they seek additional revenue to plug a widening hole in the state budget.
The Russian authorities “are going for all ways to extract money from society now that they are facing budget deficits. Rich people first,” Maria Snegovaya, an analyst with the Washington-based Center for Strategic and International Studies, told RFE/RL.
Russia’s budget deficit has ballooned this year as energy prices fall, corporate profits shrink, and war expenses rise. The government has considered raising taxes to fill the gap, though that could further undermine an already struggling economy.
Beyond whatever cash it can bring in, pursuing prominent bloggers may be a way for President Vladimir Putin’s government to signal that rich and famous Russians must do their part as the country fights what the Kremlin is casting not as a war of aggression against Ukraine but as an existential battle with the West.
Aside from wealthy bloggers allegedly underpaying their taxes at a time when many Russians are suffering from the economic fallout from the unprovoked invasion of Ukraine in February 2022, the authorities may go after citizens who have fled the country since then.
Parliament is working on legislation that would more than double the income tax rate on Russians working abroad to 30 percent, from 13 percent. Hundreds of thousands of people have left Russia since the full-scale invasion, including more than 300,000 people following Putin’s announcement of a major military call-up last September.
'Fewer And Fewer Billion-Dollar Companies'
Blinovskaya sits atop a world of hundreds of Russian bloggers pulling in over $1 million dollars a year apiece from the sale of goods and services or advertisements.
Aside from motivational speakers, they include people blogging about food, fitness, travel, and fashion, among other topics.
The COVID-19 lockdown turned into a financial boon for many bloggers around the world as people, stuck at home, spent more time perusing social media.
Bloggers often flaunt their wealth on social media to demonstrate their success, a key ingredient for attracting more followers but one that can be controversial in times of economic stress like Russia is currently experiencing.
The blogging industry has historically been financially opaque, experts say, and Russia has been no exception.
Russian bloggers like Blinovskaya are accused of dividing their revenue among several companies so that each would be under a certain threshold and qualify for the lower tax rate.
Entrepreneurs in Russia with annual revenue below 188 million rubles ($2.4 million) pay anywhere from 1 percent to 6 percent in taxes, depending on the region. Those making more pay a much higher rate.
Russia had turned a blind eye to the well-known scheme for years but now appears intent on changing that as the war in Ukraine and Western sanctions batter the economy. Russia’s economy contracted 2.1 percent last year and may barely eke out a measure of growth this year.
Aleksei Fedyarov, a Moscow-based lawyer who specializes in tax issues, told Current Time that Russian authorities had previously considered tax evasion cases under 1 billion rubles as “a trifle.”
Now, cases involving evasion of 200-300 million rubles ($2.5-3.8 million) are viewed as big, he said, as Western sanctions imposed after Russia’s invasion of Ukraine in February 2022 batter the economy.
"Before the war, there was someone to collect [taxes] from. Now business has shrunk, and there are fewer and fewer billion-dollar companies,” Fedyarov said.
Western sanctions have ravaged many sectors of the Russian economy, including auto production and the travel industry.
Shot Across Bow
Talk of a crackdown on Russian bloggers began percolating online in March after two of the country’s biggest Instagram stars were accused with evading taxes.
Valeria Chekalina, who posts to her more than 10 million Instagram followers about how to lead a healthy lifestyle, was accused in March along with her husband, Artyom Chekalin, of underpaying 300 million rubles ($3.7 million) in taxes.
The authorities froze their property and temporarily barred Chekalina from using the Internet.
Aleksandra Mitroshina, who teaches people how to promote their business or sell products on social media, was accused days later of underpaying 120 million rubles ($1.5 million) in taxes.
Mitroshina, who has campaigned against domestic violence, has been more of an activist than some other popular bloggers. On Instagram, she voiced support for Aleksei Navalny following his arrest in January 2021, charging that the Russian authorities had tried and failed to kill him and were instead looking for a pretext to lock him up.
Mitroshina fled to Dubai following the full-scale invasion of Ukraine and voiced opposition to the war, which is now punishable by prison in Russia. She said fears being arrested if she returns for her political stance.
Blinovskaya, Chekalina, and Mitroshina all actively use Instagram, which was banned in Russia last year as the Kremlin sought to censor information about the war. The ban is routinely flouted by millions of Russians through the use of a virtual private network (VPN).
In an interview with the official government newspaper Rossiiskaya Gazeta in March following the arrest of Chekalina, Moscow-based lawyer Aleksei Karabayev said the high-profile case was meant to “stimulate bloggers to bring their money out of the shadows” and pay their taxes.
He said he expected the government to pass new legislation later this year aimed at better regulating and taxing bloggers.
A Drop In The Ocean
Russia is investigating at least 30 other bloggers who have more than 1 million followers on social media for possible tax evasion, Telegram channel Mash reported on April 29.
Russian media reported on May 2 that the tax authorities have blocked the bank accounts of two companies belonging to blogger Oksana Samoilova.
The moves are bearing some financial fruit for the budget. Blinovskaya has reportedly admitted her guilt and began paying her tax debt. Mitroshina told Russian media she has paid off her tax bill.
Blogger taxes will barely make a dent in Russia’s deficit, however. Russia's budget deficit stood at 2.4 trillion rubles ($29.2 billion) for the first three months of 2023.
