Russian MinFin to discuss windfall tax proposals with RSPP, not willing to compromise on revenues
DUSHANBE. Oct 19 (Interfax) - The Russian Finance Ministry plans to meet with the Russian Union of Industrialists and Entrepreneurs (RSPP) to discuss windfall tax proposals but considers amendments that might lower planned revenue from the tax are unlikely to be submitted to the State Duma.
"The windfall tax parameters are already included in the budget, so on that basis we will of course, meet with our colleagues from the RSPP and listen to their proposals. But overall it'll depend on what windfall revenue we generate as a result of their proposals," Deputy Finance Minister Alexei Sazanov told reporters.
"In any case, the revenue has already been budgeted, and the corresponding budget package has been submitted to the State Duma. So any changes that would reduce revenues or expected windfall revenue are unlikely," he said, when asked whether the RSPP's proposals regarding the windfall tax and other proposals, including those regarding the taxation of closed-end mutual funds, might be taken into account.
Sazanov did not say when a meeting with the RSPP might take place, only that it would depend on Finance Minister Anton Siluanov's schedule.
There are no plans for "personal" industry meetings on the windfall tax, Sazanov said when asked whether fertilizer producers had approached the Finance Ministry with a view to adjusting the potential burden of this tax.
"We'll have a general meeting with our colleagues from the RSPP, where we'll have a thorough discussion of their proposals for changes to the windfall tax. Separate meetings with individual industries are not planned," Sazanov said.
It is too early to say whether companies from this industry will be subject to the excess profit tax, he said. "We need to wait for the [fertilizer price] rates by the end of 2026 to calculate this," he said.
The Russian Finance Ministry has, amid ongoing criticism of the windfall tax mechanism from big businesses, reiterated its position that the bill submitted to the State Duma already represents a compromise with the business community.
The bill states that the size of the windfall tax will be determined as the product of the amount of the extracted mineral resource and the amount by which its average price in 2026, 2027 and 2028 exceeds the average price for 2025. At the same time, for 2027 and 2028, the average price for 2025 will be indexed using coefficients of 1.1 and 1.21, respectively. The obligation to pay the tax arises only if the average price is exceeded by at least 10%.
The tax will apply to commodity ores of ferrous metals (iron, manganese, chromium), non-ferrous metals (aluminium, copper, nickel, cobalt, lead, zinc, tin, tungsten, molybdenum, antimony, magnesium), multicomponent complex ores, as well as mining and chemical non-metallic raw materials (apatite-nepheline and phosphorite ores, potassium salts, boron ores), mining and chemical raw materials containing metals (apatite-staffelite, apatite-magnetite, low-iron apatite ores) and intermediate products containing one or more precious metals (gold, silver, platinum, palladium, iridium, rhodium, ruthenium). The windfall tax rate in the general case is set at 30%, and with respect to gold it is set at 20%.
The version of the draft amendments to the Russian Tax Code, which provides for the introduction of a windfall tax for mining and metallurgical companies, that has been received by the State Duma smooths out the consequences of price spikes for future payers, Finance Minister Siluanov said last week after the Russian Union of Industrialists and Entrepreneurs (RSPP) criticized the bill.
Vladimir Potanin, president of Norilsk Nickel, the largest potential windfall taxpayer, then told RBC TV that disagreements over the project remain, with the definition of the tax base remaining key.
"The Finance Ministry is being accommodating, offering various sweeteners, understanding the difficulties this tax maneuver will cause us. A heavy burden on businesses in this situation is normal, but only if it comes from money that has been earned [profit]. You can't take money upfront; you need to take it from what you've earned, not from what the business doesn't yet have. This is currently the main topic of discussion with the Finance Ministry," he said.
