Official: Russian govt asks Duma to adopt added oil income tax

MOSCOW, Nov 15 (PRIME) -- The Russian government is asking the State Duma, parliament’s lower chamber, to approve an added income tax on oilfields in order to avoid output reduction, Deputy Prime Minister Arkady Dvorkovich said at a meeting with members of the United Russia party on Tuesday.

“We are asking the State Duma – with the help of government’s measures to raise income for the budget by raising the mineral extraction tax (MET) – to consider a possibility of introduction of an additional income tax or an oilfield profit tax, it can be called several ways, to stimulate additional development on complex blocks, on complex deposits and not to provoke a crisis in the oil industry, not to provoke an output decrease and a further loss of budgetary income,” Dvorkovich said.

The government has to tailor the existing MET individually for each project. The Energy Ministry earlier suggested replacing the outdated MET with an oilfield profit tax, or a tax on oil sales revenue minus development and delivery expenses, for brownfields.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.

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