MET deductions to only be granted for new tin mining projects in Far Eastern Federal District - draft bill
MOSCOW. Dec 5 (Interfax) - Only new projects fully or partially developed in the Far Eastern Federal District will be granted a MET tax deduction from January 1, 2023 to December 31, 2032, according to a draft bill submitted to the State Duma. For all other projects in the district, the rate will be 28% starting on January 1, 2023, since the zero MET rate will cease to apply.
The document (N249349-8) has been posted in the parliament's electronic database; its authors are a group of senators and deputy Galina Danchikova.
According to the amendments, starting on January 1, 2023, tax deductions will be available for expenses for the acquisition, construction, manufacture and delivery of fixed assets as well as expenses for bringing such assets to a condition suitable for use. The objects must relate to mining equipment, road, transport, engineering and energy infrastructure, or relate to production facilities used for the processing (enrichment, technological processing) of tin.
The draft law prescribes the cases in which a company may claim a deduction. During the entire tax period the taxpayer must not be a resident of any type of special economic zone, a resident of the Arctic zone, a participant in regional investment project (RI), IPPA or SPIC. At the same time, the taxpayer must itself or through interdependent entities extract tin from deposits with a depletion rate of less than 1% (i.e., new projects).
Beginning on January 1, 2013, a zero MET rate was applied to the extraction of conditioned ores of tin in the Far Eastern Federal District, with the preferential rate in effect through December 31, 2022 inclusively. Thereafter, projects (except for new projects as part of IPPA, for which there are separate concessions) will be taxed at a rate of 8% multiplied by the rent coefficient of 3.5, i.e. the rate may be 28%. The rent coefficient was introduced for a number of solid minerals starting on January 1, 2021.
The draft bill submitted by deputies specifies that from January 1, 2023 to January 1, 2028, the tax deduction will cover all costs of acquisition of fixed assets, and from January 1, 2028, the deduction cannot exceed the amount determined as the difference between the amount of tax calculated by applying the rate of 28% (the 3.5 rent coefficient) and the rate of 8% (the 1 rent coefficient).
The deduction will not be in effect for tax periods (a month for MET) when the price of tin on world markets exceeds 2,818 rubles per kg. or 2,818,000 rubles/tonne ($45,673 per tonne).
The price of tin on the London Metal Exchange as of December 1, 2022 stood at $23,331 per tonne.
Russia's leading tin mining company is Rusolovo , part of Seligdar Holding . The company's key development project is the Pyrkakayskiy deposit in Chukotka.