| The Ministry of Finance has come up with a new tax for oil workers The Russian fiscal system may soon introduce a completely new tax in the field of natural resources. The Ministry of Finance is developing draft amendments to the Tax Code introducing the so-called additional income tax (ATT). This was stated yesterday by the deputy head of the ministry's tax policy department, Anna Salina. According to her, “the tax rate will be calculated based on the profitability of oil producing companies: the higher the costs, the lower the tax.” The action of the AIT, according to the calculations of the Ministry of Finance, should lead to differentiation of the tax burden on mining companies, which oil industry workers have been insisting on for two years now. True, those for whom these transformations are being carried out have so far reacted warily to the Ministry of Finance’s proposals.
Representatives of the oil industry are confident that the state only wants to create the appearance of reducing the tax burden, but in fact will calculate taxes in such a way as to withdraw even more. They cannot understand why the authorities, instead of differentiating the rate of mineral extraction tax (MET), are introducing a new tax that is very difficult to calculate. Or they don't want to. Since oil companies have traditionally focused their lobbying efforts on revising the flat mineral extraction tax scale, which made transfer pricing difficult.
In 2001, royalties and VSMB (tax on the reproduction of the mineral resource base) were replaced by one turnover tax - the mineral extraction tax, which does not depend on whether the company has a profit. The Ministry of Finance did not deny that the tax was set unfairly, but the treasury suffered serious losses from minimizing the VSMB and royalties, and fairness was sacrificed to budgetary expediency. Therefore, attacks by interested structures on legislators and fiscal departments with various proposals to change the tax regime for the oil industry began immediately after the introduction of a flat mineral extraction tax scale.
The Ministry of Finance had a clear answer: today it is impossible to differentiate the existing mineral extraction tax rate by building a clear mechanism for monitoring which enterprise is more profitable. “How to calculate all this?” - Ms. Salina asks a question that the Ministry of Finance considers rhetorical. It would be more reasonable, as Ilyinka believes, to introduce, in addition to the mineral extraction tax, a new tax that takes into account the costs of enterprises for the development of deposits. It is assumed that payments for the use of subsoil will consist of two parts: a reduced mineral extraction tax and a mineral extraction tax calculated from the profitability of the field. The reduction of one tax and the introduction of another, as Ms. Salina assured, will take place simultaneously.
Oil workers reacted with restraint to the planned innovation, fearing that if a reduction in the mineral extraction tax occurs, it will be very insignificant, and instead of improving the tax collection system, companies will receive a new tax in addition to the current mineral extraction tax rate. LUKOIL, emphasizing the need to introduce a differentiated tax rate, declined to provide detailed comments on the Ministry of Finance’s initiatives. A representative of Rosneft said that the company has been waiting for changes to the flat scale for a long time, but no calculations have been made to determine how unprofitable the flat scale is for their company. Oil and gas analyst at NIKoil Investment Company Lev Snykov believes that “the new order will not encourage companies to develop old fields; rather, they will strive to invest in new ones, where, by definition, there are high costs.”
However, given the fact that the redistribution of income from the extractive industries in the pre-election situation has become a bargaining chip for many politicians, the Ministry of Finance decided not to rush with the new tax. The earliest we can expect its introduction is 2006. The tax department remains calm, not excluding the possibility that by that time a fundamentally different approach will likely prevail in the taxation of natural resources. “There are now so many options for changing the mineral extraction tax that we will not comment on all the initiatives of the Ministry of Finance,” the Ministry of Taxes told a Vremya Novostey correspondent, “so it is premature to recalculate for whom taxes will be reduced and by how much.” Irina SKLYAROVA |
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