Russian MinFin to assess whether to use Urals crude quotations from Argus agency or SPIMEX index to calculate taxes
MOSCOW. Nov 15 (Interfax) - The Russian Finance Ministry will assess the possibility of using the Saint-Petersburg International Mercantile Exchange (SPIMEX) index to calculate taxes and duties or Urals crude quotations calculated by the Argus agency on the basis of FOB in the first quarter of next year, Russian Deputy Finance Minister Alexei Sazanov told Interfax.
Urals quotations on the basis of CIF are currently prescribed in tax legislation, but Argus has changed its approach to forming quotations due to a European Union embargo on imports of Russian oil to be introduced on December 5, 2022. If previously CIF quotations were determined in European ports as a result of trading, Argus will now publish the price in Russian ports, that is, FOB, and CIF quotations will be calculated taking into account the cost of transportation to European ports and insurance services.
The Finance Ministry said earlier that it would continue to use CIF quotations in 2023 and would in the first quarter study the expediency of switching to using other quotations.
Sazanov told Interfax that, more specifically, "the quotation of the Saint-Petersburg exchange" would be considered.
"Concordantly, they're currently developing their index. The methodology of this index needs to be understood, how it's formed needs to be looked at, who supplies the information to calculate the index, in order to assess to what extent it can be used for tax and customs purposes," Sazanov said.
Argus has assured the ministry that CIF quotations will continue to be formed, he said.
The use of FOB quotations would lead to a loss of budget income of 1 trillion rubles, and therefore, legislation will have to be changed in order to use them, Sazanov said.
"Other quotations [not CIF] are formed on the basis of FOB, and this is inevitably a shortfall in revenue for the budget of a trillion rubles. Accordingly, either the calculation formula for the MET [mineral extraction tax] needs to be changed and pegged to FOB quotations under the current conditions, and this we would then have to discuss with oil companies, naturally, because any change to the MET formula is impossible to realize without the Energy Ministry and oil companies. Or preserve CIF quotations for now. Therefore, we're preserving CIF quotations for now, and we'll discuss it further," Sazanov said.
Argus forms quotations on the basis of a survey of sellers and foreign buyers.
SPIMEX said earlier that the exchange had already been proposing for a fairly long time formalizing the method for calculating the MET, export duties, and other mandatory payments on the basis of a domestic system built on data on deals concluded on an off-market basis.
"We see markets, including the oil market, including through registration of off-market deals. The registration of such agreements is performed in line with government resolution No. 623 of July 23, 2013," SPIMEX said.
According to the resolution, companies must present the exchange with information on off-market agreements for oil and oil products concluded by the producers of these goods, individuals belonging to a corporate group with producers, or individuals acting in the interests or at the expense of the individuals specified.