9 Nov 2022 11:58

Duma committee approves raising profit tax on LNG exporters to 34% from 20%

MOSCOW. Nov 9 (Interfax) - The State Duma Budget and Taxes Committee has approved amendments to the Tax Code that would raise the profit tax on liquefied natural gas (LNG) exporters to 34% from 20% for 2023-2025.

A clarification was added to the bill that the tax hike will only apply to companies that exported gas prior to December 31, 2022.

The amendments were drafted for the second reading of the bill (N201629-8), as part of tax changes intended to boost budget revenues. They were submitted along with the budget package at the end of September.

In the first reading of the bill on October 18, it was proposed to raise the profit tax rate to 32% and there was no specification in the text that the increase will not apply to new projects. It was expected that the tax hike would apply to companies that sell gas for export in the reporting (tax) period of 2023-2025, but the final text of the bill specifies that the increase will not apply to new projects.

"For organizations that conduct LNG production activities and exported at least one shipment of LNG before December 31, 2022, inclusive, based on a license to exercise the exclusive right to export gas, the tax rate is set at 34% in the tax periods of 2023-2025," the amendments said.

The tax will be split evenly between the federal and regional budgets, with each getting a tax rate of 17%.

The tax hike was expected to generate 200 billion rubles of additional revenue for the federal budget in 2023. New estimates were not included in the materials attached to the bill.

The Duma is expected to consider the bill in the second reading at its plenary session on November 10.