23 May 2024 11:42

Authorities ready to discuss abolishing 'exchange rate' export duties in conjunction with increase in profit tax - Siluanov

MOSCOW. May 23 (Interfax) - The Russian government is ready to consider abolishing export duties tied to the dollar exchange rate in conjunction with a "fair" increase in the profit tax rate, Russian Finance Minister Anton Siluanov said on Thursday.

"When determining tax innovations, business proposed to abandon the use of turnover taxes, such as exchange-rate-based export duties, which do not take financial results into account. We are ready to discuss this proposal in connection with a fair increase in the corporate profit tax rate, that is, taxation of the companies' final results, and not their turnover," he said, speaking at State Duma parliamentary hearings on changes to the tax system.

An export duty tied to the ruble exchange rate on a wide range of goods was introduced by the government on October 1, 2023 and the government has decided it will remain in effect until the end of 2024 (individual goods have been gradually removed from the duty based on situations in some industries). The duty rate at an exchange rate of 80-85 rubles per U.S. dollar is 4%; at 85-90 rubles/$1, the duty is 4.5%; 5.5% at 90-95 rubles/$1, and 7% at 95 rubles/$1 and more.

Previously, the Russian Union of Industrialists and Entrepreneurs (RSPP) came up with a proposal to abandon exchange rate duties on export goods as a one-time fiscal measure. In return, business proposed to revise the profit tax rate, linking it with companies' investment activities and locking in the tax calculation rules for 5-7 years. Union head Alexander Shokhin pointed out that these "exchange rate duties" were introduced by the government without prior discussion with business and actually became an element of the fiscal system. He estimates that, for many companies, the introduction of the duty turned out to be equivalent to a double-digit profit tax increase.