Ministry of Economic Development against MinFin suggestion to change MET, decision fraught with production decline
MOSCOW. Sept 23 (Interfax) - The Economic Development Ministry does not support the Finance Ministry's suggestion to change the Mineral Extraction Tax (MET) formula, the Ministry's press service said quoting the deputy head of the Economic Development Ministry, Nikolai Podguzov.
"The Economic Development Ministry does not support the Finance Ministry's suggestions to revise the MET formula, since such a measure will have a negative impact on the economic actions of the fields, and will likely 'kill' production on the most effective fields in terms of tax returns. Obviously, if production falls, so will taxes," the press service quoted Podguzov as saying."
"The calculation of the Finance Ministry on the tax effect is seriously [by hundreds of billions of rubles] inflated and is made from a calculation of stable production. In addition, the tax effect from such a decision would appear only in 2016, then it would go into the negative territory," Podguzov said.
"Today there are much more effective approaches to raising tax returns on active fields, in the first place, through stimulating production at mature fields. Such approaches lend a long-term positive tax effect and at the same time facilitate the development of the oil industry," the deputy minister said.