Russia To Review Oil Export Duty
02 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
Russia’s Finance Ministry will propose increasing the country's mineral extraction tax (MET) on oil and gradually decreasing its oil export duty to 57%-58% from the current 60% by the middle of May, Finance Minister Anton Siluanov said on Monday. The adjustment is intended to make the tax system more balanced.
Ministries and agencies began discussions, in March 2013, about the possibility of changing the formula for calculating the export duty for oil and oil products by March next year. They decided that the existing '60-66 taxation system,' which was introduced on October 1, 2011, should be replaced with a '55-60 taxation system.'
The 60-66 system currently sets the maximum export duty on oil. This is based on the difference between the oil price of USD182.50 per tonne and average global oil prices estimated each month.
The head of the tax, customs and tariff department of the Finance Ministry, Ilya Trunin, did demonstrate caution, however, stating that the change to the 55-60 system "should be made very carefully, and drastic moves should be avoided – the export duty should be reduced by no more than 2%-3% annually."
Oil companies have been seeking tax relief as the need to tap new oil fields in remote regions is increasing production costs. However, the Government is not in a position to provide tax relief to the domestic oil industry as its budget is in deficit and it is in the midst of large-scale spending projects such as the 2014 Winter Olympics and the 2018 World Cup.