Deputy min says 4 Russian oil cos bid for added income tax pilot

MOSCOW, Feb 9 (PRIME) -- Russian oil companies Gazprom Neft, Lukoil, Surgutneftegas and RussNeft have filed bids for a pilot project to test an added income tax on projects with a combined oil production of about 7 million tonnes, Deputy Energy Minister Kirill Molodtsov said in an interview to magazine Oil and Gas Vertical published on Thursday.

“As of today, the bids and forecasts for higher oil production from the switch to the added income tax were filed by four companies – Gazprom Neft, Lukoil, Surgutneftegas and RussNeft. The combined volume of oil production on the listed projects stands at about 7 million tonnes,” he said.

“So far, all the projects are represented by fields in West Siberia. The companies have not yet expressed their readiness to switch to the new taxation regime for fields in East Siberia,” he said, adding that the list of pilot projects will be adjusted after a bill on the tax is submitted to the State Duma, the parliament’s lower house.

The bill will be soon coordinated by the Energy and Finance ministries, he added.

Now the government has to tailor the existing mineral extraction tax (MET) individually for each project. The Energy Ministry earlier proposed replacing the outdated MET with an oil field profit tax, or a tax on oil sales revenue minus development and delivery expenses, for brownfields. The Finance Ministry made a counterproposal to apply an added income tax, or the difference between the cash flow and capital expenditures.

In January, Finance Minister Anton Siluanov urged to change the tax regime in the oil industry and called for introduction of an added income tax from 2018.

End