Zero tax on gas to produce ammonia and hydrogen in Russia to apply throughout Arctic - bill

MOSCOW. Oct 21 (Interfax) - The Russian State Duma's Budget and Tax Committee approved an amendment to the Tax Code on Monday that would usher in zero mineral extraction tax or MET for gas produced in the Arctic zone and used in the production of ammonia and hydrogen along similar lines to the MET rate that applies to gas produced on the Yamal Peninsula.

Gas produced on the Yamal Peninsula is not subject to MET from January 1, 2012 until 12 years have passed since the sale of the first LNG cargo. This concession applies to gas used to produce LNG, ammonia or hydrogen, in subsoil areas located entirely or partially on the Yamal and Gydan peninsulas in the Yamalo-Nenets Autonomous District.

A similar concession has applied to gas production in subsoil areas located in the Arctic zone since April 1, 2020, if the gas is used for LNG production or as petrochemical feedstock. The legislators are now proposing that MET should not be charged on gas produced in the Arctic zone and used for the production of ammonia and hydrogen. The Arctic zone includes subsoil areas entirely north of the Arctic Circle, entirely within the boundaries of the Arkhangelsk Region, the Nenets Autonomous District, Komi Republic, the Yamalo-Nenets Autonomous District, Krasnoyarsk Territory, Sakha Republic (Yakutia) and Chukotka Autonomous District.

The budget committee's first deputy head, Olga Anufriyeva, said at the meeting that the issue had been raised in the past when discussing extending the concession to gas produced on the Yamal Peninsula. "I gather the government has [now] given its approval, she said. "We back it," Deputy Finance Minister Alexei Sazanov said.