Windfall tax on Russian mining companies expected to generate 200 bln rubles/year in 2027-2029

MOSCOW. Oct 1 (Interfax) - Russia's proposed windfall profit tax on mining and metal companies is expected to bring in 200 billion rubles of revenue annually, a memo attached to the draft federal budget for 2027-2029 said.

The budget proposes to impose the windfall tax as part of adjustments to natural resource rent taxation in the mining and metals sector. The tax rate will be 20% to 30% of the "increase in income as a result of the growth of world prices for solid mineral resources in the ruble equivalent compared to the level of the base year of 2025," the document said.

"This will increase the fairness of the distribution of income from the natural resource rent between businesses and the state," it said.

The tax rate of 20% will apply to gold miners, the Finance Ministry said earlier. The grounds for imposing the tax is the steep increase in world prices for precious and nonferrous metals, fertilizer and other commodities, thanks to which companies earned additional rent income, commentary accompanying the budget package said.

BCS analysts estimated that, based on profit, the tax could amount to 52 billion rubles (2.7% of market capitalization as of September 23) for Nornickel , 39 billion rubles (10%) for Rusal and 25 billion rubles (2.5%) for Polyus . Fertilizer producer PhosAgro is expected to have a smaller profit in 2026 than in 2025, so it could avoid the new tax.

The Russian government resorted to a windfall profit tax in 2023, when it collected over 300 billion rubles. The one-off tax for large companies with average profits over 1 billion rubles in 2021-2022 was imposed as of January 1, 2024 at a rate of 10% of the increase in profit in this two-year period over 2018-2019. However, the tax was actually only half of this, as companies that made a security deposit in the fall of 2023 could reduce their effective tax rate to 5% and the lion's share of companies took advantage of this option.