Oil bosses ask Putin to shift fuel excise payment from refineries to forecourts
MOSCOW. March 28 (Interfax) - The heads of Russia's biggest oil companies have written to Russian President Vladimir Putin in light of the fuel excise hike on April 1 to shift payment of excises on gasoline and diesel from oil refineries to filling stations.
The letter, seen by Interfax, was signed by Lukoil chief Vagit Alekperov, Surgutneftegas head Vladimir Bogdanov, Gazprom Neft's Alexander Dyukov, Bashneft's Alexander Korsik, Zarubezhneft's Sergei Kudryashov, Tatneft's Nail Maganov, Rosneft President Igor Sechin and Eduard Khudainatov, president of Independent Petroleum Company.
"The nature of excise tax as an indirect tax effectively envisages that the burden of paying excise is shifted to the end consumer upon sale at filling stations. For the purpose of easing the administering of excises, it is currently legally determined that excise on petroleum products is paid by oil refineries, which are then forced to compensate what they have paid in excises when they sell petroleum products to the end consumers. Receipt of excise tax from buyers of petroleum products in the price at which it is sold effectively means the substantial diversion of the cash funds of conscientious producers of quality motor fuel," the letter reads.
"This factor has a negative effect on the cash flows and financial state of oil companies, the refining margins of which have declined considerably due to the major tax maneuver and decision to increase excise taxes from April 1, 2016. In addition, this situation negatively affects plans to complete the modernization of oil refineries," it said.
"It seems that to resolve the problem, it is necessary to alter the principle by which excises are charged and paid by shifting this obligation to end consumers upon sale at filling stations, with taxes remitted to the budgets of the corresponding constituent members of the Russian Federation," the oil bosses wrote.
"Implementation of the measure is becoming possible in connection with the development and introduction by the Federal Tax Service of new cash-register technology with upgraded software making it possible for the tax bodies to receive real-time information concerning flows of goods and cash at retail sales enterprises, including filling stations," they said.
In addition, the measure will make it possible "in crisis periods to establish a fairer and more economically justified system for distributing taxes among the Russian regions," he said.