Tax deduction for Vankor will not depend on oil price, may exceed infrastructure spending

MOSCOW. Nov 19 (Interfax) - The Russian government has proposed to change the mineral extraction tax (MET) deduction for Rosneft's Vankor oil field so that the rate does not depend on the base oil price.

Furthermore, the deduction may be greater than actually paid expenditures on infrastructure, but may not exceed the amount of MET paid for the same period.

The new rules for the MET deduction for Vankor are included in the government's draft amendments for the second reading of the bill with amendments to the Tax Code regarding goods subject to excises (No. 746277-8).

Under current law, since April 1, 2020 the developer of the Vankor cluster, Rosneft can get a MET deduction equivalent to the amount spent on infrastructure built for resource blocks in the fifth excess profit tax (EPT) group.

From April 1, 2020 to January 1, 2021, the company was eligible for the deduction if the price of Urals crude exceeded the base oil price set by Russia's Budget Code, which was $42.45 per barrel in 2020. In 2021, the calculation was adjusted for a change in the cut-off oil price from the base value under the fiscal rule to $25 per barrel.