Finance Ministry proposes tax exemption for coalbed methane production
MOSCOW. Sept 13 (Interfax) - Russia's Finance Ministry has drafted and published on its website a bill to amend the Tax Code in order to exempt coalbed methane production from taxation.
The current version of the Tax Code does not define coalbed methane as an independent mineral resource, which leads to disputable situations in tax administration when the gas is a by-product of coal field development, the ministry said in an explanatory note attached to the bill.
However, coalbed methane is an element whose presence and concentration at coal deposits has a direct impact on the safety of coal mining.
In order to ensure occupational safety and eliminate sudden emissions of coalbed methane, fires and explosions in mines, coal seams are degasified, as a result of which methane is released, mixes with mine air and dissipates into the atmosphere. In some cases, coalbed methane is flared.
However, world experience shows that production of coalbed methane is promising with the appropriate government support, the ministry said. Countries that are leaders in coalbed methane production - the United States, Canada and Australia - have legislation that provides certain tax incentives for effective implementation of coalbed methane production projects.
The bill is intended to eliminate uncertainty in defining coalbed methane as a recovered mineral resource for the purposes of taxation, as well as encourage coal mining companies to develop unpromising deposits (heavy methane concentration, volatile) by harnessing methane recovered in association with coal mining.
