PRESS: Russian ministry may present new oil taxation reform soon

MOSCOW, Sep 21 (PRIME) -- Russia’s Finance Ministry plans to present a new reform of taxation of the oil sector at a financial forum later this week, Vedomosti business daily reported Wednesday.

The ministry has been conducting an oil tax maneuver from 2016 by decreasing oil export duties and increasing the mineral extraction tax (MET) rate.

The new reform envisages zeroing duties already in 2018 and raising the MET rate accordingly. One of the options is a switch from the MET to a tax on added incomes, parameters of which are under discussion.

Zero duties mean zero preferences on duties, but they were imposed only on oil exports, while after the new reform all oil produced in Russia will be taxed. The internal price of oil is tied to duties; the customs subsidy that allowed inefficient oil refineries to export oil products with low depth of refining will vanish. As a result, the price of oil and gasoline will grow in Russia, Vedomosti reported citing a source.

The government will have two options: either to allow gasoline prices to grow, which is socially dangerous, or to compensate for losses of refineries and restrain growth of prices, the source told the daily.

The ministry also offered to introduced negative excises on oil, so when companies put an excise on oil sold to refineries, oil refineries will be able to receive a tax deduction amounting to the sum of the excise with an additional markup.

The abolishment of subsidies will add about 600 billion rubles to the federal budget if the oil price amounts to about U.S. $50 per barrel, while oil refineries will be able to return about 300 billion rubles from the budget through negative excises. The budget’s net revenue from the measure may amount to 300 billion rubles, Vedomosti said.

(64.7513 rubles – U.S. $1)

End