Premature to introduce higher deductions for offshore exploration
ARKHANGELSK REGION. Aug 1 (Interfax) - It is premature to introduce higher deductions of expenses for exploration on the continental shelf using a coefficient of 3.5, Russian Natural Resources and Environment Minister Sergei Donskoi told reporters.
"At present, considering how the discussion of the tax on excess profit is going and so on, it's not that a new change regarding 3.5 as the coefficient should not be expected, but probably one should understand that for a start at least we need for this coefficient to start working, and then it will be possible to make some kind of additional decisions. First, I think, successively, this is quite realistic. The main thing is to understand how effective this will be," Donskoi said.
"We agreed on [a coefficient of] 1.5. There was the commission of [deputy prime ministers Alexander] Khloponin and [Arkady] Dvorkovich, where this decision was made. All of the regulatory decisions are supposed to be made by the end of the year. There will probably be changes in the Tax Code and now the State Duma fall session is supposed to pass," Donskoi said.
The minister said earlier that the Natural Resources Ministry expected that the mechanism for the deduction of expenses on exploration from the profit tax using the adjustment coefficient of 1.5 might go into effect in 2017.
This mechanism will be used for all exploration work. It is expected to increase investment in exploration by about 100 billion rubles or about 30% of the current level.