Russian Industry and Trade Ministry to insist on adjusting steel excise tax threshold

MOSCOW. Jan 28 (Interfax) - The Russian Industry and Trade Ministry will insist on adjusting the calculation of the steel excise tax, Deputy Director of the Ministry's Department of Metallurgy and Materials Andrei Saveliev said on Tuesday.

"Times of plenty are over, and it is necessary to optimize both tax legislation and other tariffs of natural monopolies, and so on. Therefore, we will certainly insist, both within the government and hopefully we will be supported in the Federal Assembly, on adjusting the threshold for the excise tax on liquid steel," he said. "First of all, we are not talking about abolition. But we are saying that when we introduced the excise tax, the threshold was 30,000 rubles, below which the excise is not paid, and we based that on the economic realities of that time. Yes, we have a measure to index this threshold, let's implement it. At the same time, we are not asking for any high values, so that the excise tax is effectively not paid. We are simply asking to set actual inflation as recorded by the Central Bank [of Russia] over these years," he said.

Saveliev said the margin at some companies in the steel industry "working profitably" had fallen "around 10 percent."

"There is an absolutely completely separate situation - this is electrometallurgy, and a number of vertically integrated companies, for which it [profitability] is about zero, or there is negative operating cash flow. Why should they still pay excise tax?" he said. "We are talking about a balanced adjustment, which, on the one hand, should not significantly affect fiscal balance, but still provide adequate benefit for those companies that need it," he said.

Steelmakers want to double the price for slabs above which steel becomes subject to excise tax to 60,000 rubles from 30,000 rubles, market sources told Interfax at the end of last year.

The Russian Steel Association drafted the proposals, one of the sources said.

According to the excise tax calculation formula for vertically integrated steel producers, approved at the end of 2022, the excise tax is reset to zero if the export price for slabs for a calendar month, multiplied by the average U.S. dollar/ruble exchange rate for the calendar month, is less than 30,000 rubles. The cost of a tonne of slab remained above 30,000 rubles in 2024.

Budget revenues from excise tax on liquid steel in 2025 are estimated at 69 billion rubles with 64.5 billion rubles expected in 2024.

Saveliev estimated Russian crude steel output fell 6.5% and steel product output fell 7.5% in 2024.