The Ministry of Finance and the Ministry of Energy are ready to resolve disagreements on them by the end of the year

Contradictions between the Ministry of Finance and the Ministry of Energy regarding tax incentives for shelf development will be resolved this year, the ministries told Kommersant. Previously, the Ministry of Finance proposed to extend the discussion of specific parameters of the tax system until the spring of 2013.

The Ministry of Finance on Wednesday published a report sent to the government, which outlined proposals for an incentive tax system for shelf development, and also listed 13 points of disagreement with the Ministry of Energy on this issue. The report is dated October 1, as this was the date indicated in the April government order. Having indicated the existence of disagreements, the Ministry of Finance proposed to postpone the deadline for submitting draft basic documents on the tax system to March 1, 2013. The Ministry of Energy insisted on agreeing on all the paperwork by mid-November.

As Deputy Head of the Ministry of Energy Pavel Fedorov explained to Kommersant, the ministry actually does not have any insoluble contradictions with the Ministry of Finance. “The bills are already ready, and we have an agreement in principle with the Ministry of Finance that almost all documents can be submitted to the government within a month and a half,” said Mr. Fedorov, noting that the Ministry of Energy and the Ministry of Finance “have 90% a common understanding and principles , and mechanisms of work." According to him, there remain three complex issues that are important in a practical sense, on which disagreements still remain.

The first question concerns the deduction of costs for onshore infrastructure from the tax base of an offshore project for corporate income tax: the Ministry of Energy advocates such a deduction, while the Ministry of Finance believes that only costs directly related to hydrocarbon production should be deducted. The second question is related to determining the mechanism for exempting equipment necessary for the implementation of shelf projects from import duties and VAT. Since the issue of import duties affects the interests of other countries of the Customs Union and is within the competence of the Eurasian Economic Commission, the Ministry of Finance proposes to place imported equipment under a special customs procedure. The Ministry of Energy objects to this approach as it would create serious difficulties for companies. The third issue is the transfer of losses between the company that owns the license and the company that operates the project to reduce the tax base: the Ministry of Energy is in favor of this possibility, the Ministry of Finance is against it. Pavel Fedorov said that these disagreements will be discussed at a conciliation meeting with Deputy Prime Minister Arkady Dvorkovich, which should take place in the near future.

“It’s true that we will strive as much as possible to close the topic directly related to taxes (for offshore projects) this year,” Deputy Finance Minister Sergei Shatalov confirmed to Kommersant. He added that issues of abolishing import duties on equipment, which will require approvals within the Customs Union, may require “a little more time.” “We have come closer in terms of deadlines, we have made progress on the issue of “tax fencing” of deposits - each deposit will be considered as an independent project. Work remains to be done on other issues,” said Mr. Shatalov, noting that controversial issues can be resolved even before the conciliation meeting.

Yuri Barsukov, Vadim Visloguzov

Benefits for the shelf will not rust