State Duma committee backs bill to differentiate tight oil tax
MOSCOW. June 27 (Interfax) - The Russian State Duma's Budget and Taxes Committee at a meeting on Thursday recommended adopting a bill to differentiate the extraction tax for tight oil on the first reading.
This bill, which makes changes to Chapter 26, Part 2 of the Russian Tax Code to stimulate new investment projects at sections containing tight oil, was submitted to the Duma by the Russian government.
The bill differentiates the extraction tax depending on permeability, the degree of field depletion and the size of the oil-filled formation.
There will be a coefficient of 0.2 on the extraction tax if oil is produced from layers with very low permeability and if the marginal efficiency of the oil-filled layer is no more than ten meters. This coefficient will be valid for 120 tax periods (calendar months), starting in the period when reserves depletion surpasses 1%.
For oil produced from formations with very low permeability and a marginal efficiency of more than ten meters, a coefficient of 0.4 will be applied for 120 tax periods, starting with the tax period in which reserves depletion tops 1%.
According to the bill, a coefficient of 0.8 will be used for oil produced from a specific hydrocarbon formation, referred to as the Tyumen productive deposits, as per data in the government balance of mineral resource reserves. This coefficient will apply for 180 tax periods, starting in the period when reserves depletion is over 1%.
Furthermore, there is a 0 coefficient for oil produced at formations within the Bazhenov, Abalaksk, Khadum and Domanik productive deposits. This coefficient will be valid for 180 tax periods, starting in the period when reserves depletion at the production facility of the oilfield is over 1%.
In order to reach a certain quantity of oil produced from the hydrocarbon reservoir for which the coefficient is applied, the bill provides for direct separate accounting of the quantity of oil extracted from a particular well. The Russian government will approve the rules for registering various types of hydrocarbons and for performing accounting operations with them, particularly for taxation purposes.
