Russian government to terminate mineral extraction tax privileges

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# 01:23
16 September 2020

 In order to increase budget revenue, the Russian government decided to cancel a number of mineral extraction tax (MET) benefits for extra-viscous oil fields and on the export duty on oil for mature fields. With the abolition of tax benefits, companies will be asked to switch to additional income tax (AIT), Finance Minister Anton Siuanov told reporters on Wednesday, APA reports citing TASS.

"On the mineral extraction tax, we agreed to revise a number of benefits, which, in our opinion, are ineffective. We are talking about depleted fields, fields with super-viscous oil," he said. "The export duty exemption will be canceled for mature fields. We estimate additional revenues from this measure at about 30 bln rubles," the minister added. According to him, with the abolition of tax benefits, additional budget revenues will amount to about 80 bln rubles per year, for depleted fields with replacement by tax on income - about 100 bln rubles, on changes in the parameters of tax on income in general - about 80 bln rubles.

He emphasized that the privileges provided do not reflect the real degree of depletion of the fields, the calculations are still based on information based on data for 2006. "Now we are talking about abolishing depletion benefits and certain export duty benefits. The same applies to super-viscous oil fields - there are great benefits, the share of such deposits is about 1% of all production," Siluanov explained. At the same time, wells on such projects are not stopped, despite the current OPEC + restrictions, and oil workers are shifting restrictions to conventional fields, where benefits are not applied. "Therefore, we decided to change the procedure for granting benefits for such fields and offer them to transfer production to the terms of the personal income tax," the minister said.

Siluanov also complained that the privileges provided do not lead to an increase in investment, although this is their intention.

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THE OPERATION IS BEING PERFORMED