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Daily News: Russia Launched The Reform Of Energy And Resource Tax

Pub Date:Oct 15, 2020    |    Views:93    |    

Russia Launched The Reform Of Energy And Resource Tax

Russia has announced a sweeping reform of its energy and resource tax to simplify a system that has become more complex in recent years. The industry believes that after the reform of the energy and resources tax system, Russia's energy and resources industry is expected to provide more support for Russia's finances on the premise of balancing government revenue and stabilizing corporate profits.

The draft tax reform bill passed its first examination

In the last week of September, the Finance Ministry submitted a draft oil and mining tax legislative reform to the lower house of parliament, which was approved by the first reading. The detailed reform measures of the draft will be discussed and revised in the second and third reading.

It is understood that the key points of the oil tax reform in Russia include the elimination of tax concessions for mature and high-viscosity oil fields with higher production costs, and the elimination of export tariff exemptions for some oil fields in the Caspian Sea, eastern Siberia and the Arctic region. The main focus of the reform is on tax increases, which are expected to be 2.5 times higher than current levels for metals and mining companies, except for gold, diamond and coal companies, from 2021. This amounts to an additional 90 billion rubles ($1.2 billion) a year.

The ultimate goal of Russia's oil and mining tax reform is the full introduction of an excess profits tax (EPT), according to industry information agency S&P Global Platts. In fact, EPT has already been introduced to Russia's oil and gas sector. The EPT is mainly suitable for complicated mining conditions, has yet to start large-scale development of new fields, as well as in phase output attenuation region of western Siberia part of old oilfield, on the one hand to hold the western traditional oil-producing declining crude oil output, on the other hand, is designed to motivate in eastern Siberia, and north of oilfield development.

The Russian Finance ministry says it will improve the existing EPT system in the oil and gas industry to eventually achieve the goal of fully implementing EPT.

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