19 Oct 2018 11:18

Russian Railways prepared not to charge export surcharge for oil products, aluminum in 2019 - sources

MOSCOW. Oct 19 (Interfax) - The Russian Transport Ministry has sent the Russian Railways (RZD) Consumer Council a draft government decision on the company's financial plan for 2019.

Interfax has reviewed the contents of the letter, dated October 17, sent by Transport Ministry State Secretary Sergei Aristov.

In the plan, RZD proposes to extend the right to charge a surcharge of up to 8% on freight shipped for export, with the exception of hard coal. These surcharges were expected to be eliminated in 2019, but the company is asking to maintain them for next year and "subsequent periods." RZD's long-term development program refers to the period to 2022.

However, in the course of discussions RZD has indicated it is willing to not apply the surcharges to oil products and aluminum, a source in the transport sector told Interfax. Another source said RZD is also prepared to not charge the surcharge on grain.

In addition, the government protocol proposes to provide budget compensation for RZD's "additional expenses" on value-added tax that will arise as a result of financing investment projects with state support, according to Aristov's letter. In May, RZD chief executive Oleg Belozerov warned about the possible impact of such amendments in legislation.

"I want to draw attention to the fact that changes to Article 170 of the Tax Code went into effect on January 1, 2018 that concern VAT refunds in the acquisition of goods with subsidies and budget investment. RZD loses the right to deduct VAT as of the beginning of 2019. This will lead to our services becoming more expensive. And since we earn money, ultimately this will affect the rate, both freight and passenger. We request that this issue be considered very carefully," Belozerov said at a meeting of the Federation Council.