Tax initiatives in the oil industry will not lead to a decrease in oil production in the long term – Ministry of Finance

Tax initiatives in the oil industry will not lead to a decrease in oil production in the long term – Ministry of Finance

Tax initiatives in the oil industry will not lead to a decrease in oil production in the long term - Ministry of Finance

The tax initiatives proposed by the Ministry of Finance in the oil industry – the abolition of a number of privileges with the transition to the personal income tax (tax on added income) system – will not lead in the long term to a decrease in production if the companies invest, said State Secretary, Deputy Minister of Finance of the Russian Federation Alexey Sazanov during a meeting of the State Duma of the Russian Federation.

“We are keeping incentives for both depleted fields and for fields where there is an export duty exemption, adding a proposal to switch to income tax. The tax burden will not increase if companies invest,” he said.

Therefore, the Deputy Minister stressed, the Ministry of Finance is confident that in the long term these initiatives will not lead “to any significant decrease in oil production.”

Sazanov also said that the Ministry of Finance admits the possibility of revising the multiplying coefficient (K-rent) in the amount of 3.5 to the MET in the field of mining solid minerals, but for new projects and not earlier than 2022.

“Within the framework of the autumn session (from September to December – IF), we do not intend to differentiate the rate, the increasing coefficient for mineral extraction tax to solid minerals that we have now proposed (3.5 – IF), but by the spring session, if there are sufficient justification that a certain differentiation is needed for new projects, we will be ready to consider this starting from 2022, “he said during the discussion of the bill on the rental coefficient, which will be introduced from 2021 for most types of solid minerals, including potassium salts (current rate – 3.8%), apatite-nepheline, apatite and phosphorite ores (4%), ores of ferrous and rare metals (now – 4.8%), nepheline, bauxite, natural salt and pure sodium chloride ( 5.5%), standard ores of non-ferrous metals (8%), as well as multicomponent complex ore containing copper, nickel and platinum and mined in the Krasnoyarsk Territory (the current rate is 730 rubles / ton).

It is proposed to raise the severance tax from January 1, 2021, which will give the Russian budget about 56 billion rubles a year.

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