The government will not be able to collect all coronavirus taxes from oil workers

Russia will collect less increased “coronavirus” taxes from oil workers than it plans: in the current configuration, companies will have to reduce production, writes VTimes. The government will almost inevitably have to give them some relief.

In the next five years, the oil industry will lose 650 billion rubles, the publication writes, citing a study by Vygon Consulting (we wrote about who else will be affected by the government’s “revenue mobilization” program here ). The figure consists of a tax increase of 1.15 trillion rubles and 500 billion rubles of tax deductions for large projects, mainly for Rosneft.

In reality, it will be possible to collect less from oil workers, analysts write: the new tax conditions “kill” the production of ultra-viscous and high-viscosity oil, so the tax base will simply shrink. We are talking about the projects of Lukoil, Rosneft and Tatneft in the Volga region, Nenets Autonomous Okrug and Komi, taxes on which should increase by 260 billion rubles over five years. Sber CIB has not ruled out a complete cessation of production of such oil; Alexey Belogoriev, deputy director for energy at the Institute of Energy and Finance, also predicts a sharp drop in profitability, the publication writes.

To avoid a drop in production, oil producers need to be provided with new incentives after the completion of the OPEC+ deal, analysts write - an increased depreciation rate is possible (reduces the tax base to deduct additional investments, uplift).

The government is already discussing possible relaxations with companies, VTimes has learned. Deductions were the subject of a discussion between Deputy Prime Minister Yuri Borisov and First Deputy Prime Minister Andrei Belousov with oil workers at the end of October, but so far there have been no decisions. Lukoil President Vagit Alekperov said in an interview with Rossiya-1 that the company will devote the entire 2021 to dialogue with the government.