Russian government approves added income tax bill for oil industry

MOSCOW, Nov 23 (PRIME) -- The Russian government has approved a bill on introduction of an added income tax for the oil industry with additional orders, Open Government Affairs Minister Mikhail Abyzov told reporters on Thursday.

“It was approved with the inclusion of additional orders issued after the meeting (with Prime Minister Dmitry Medvedev) in Khanty-Mansiysk,” he said.

The government has to tailor the existing mineral extraction tax (MET) 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 The Energy Ministry earlier proposed replacing the outdated MET with an oil field profit tax, or a tax on oil sales revenue minus development and delivery expenses, for brownfields.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.

On Tuesday, Energy Minister Alexander Novak asked the government to approve the bill and to submit it to the State Duma, the parliament’s lower house, for approval in January–March 2018 so that it could come in force from 2019. The ministry chose 35 fields of oil companies Rosneft, Lukoil, Gazprom Neft, Surgutneftegas and others for participation in the pilot project to test the new tax.

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