PRESS: Russia’s fin ministry may increase oil MET from 2018

MOSCOW, Nov 29 (PRIME) -- Russia’s Finance Ministry has developed a bill to increase the tax burden on oil companies by 50 billion rubles from 2018 through raising the mineral extraction tax (MET), Vedomosti business daily reported on Tuesday quoting the draft.

The ministry tries to compensate budget losses of 40–50 billion rubles from a switch to an added income tax for oilfields, which means that a lower tax burden of some fields will have to be compensated by the whole industry, as the added income tax will be imposed on new fields of Eastern Siberia and some old fields of Western Siberia with a combined output of no more than 15 million tonnes of crude per year, Vedomosti reported.

The remaining fields may have their tax burden increased through raised MET rate.

But Sergei Yezhov, chief economist at Vygon Consulting, said that projects working under production sharing agreements and projects that received a zero MET rate will be excluded from the increased MET rate.

The MET and duties will be calculated as 35% of the oil price for brownfields and as 14% of the oil price for green fields in the first five years of operation with a further gradual increase to 35%, the business daily said.

A participant of discussion of the bill told Vedomosti that initially the ministry did not want the added income tax to cover brownfields, but oil companies attained the right to switch to the tax voluntarily.

(64.9153 rubles – U.S. $1)

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