Russia to extend tax deduction to existing tin mining projects in Far East
MOSCOW. Dec 15 (Interfax) - The State Duma Budget and Taxation Committee on Thursday voted in favour of a revised bill to grant a mineral extraction tax (MET) deduction to tin mining projects in the Far East Federal District, raise the deposit depletion coefficient to 20% from 1% and lift the ban on granting the deduction to residents of the Arctic Zone.
The amendments to bill No. 249349-8 were submitted by one of the authors of the document, MP Galina Danichikova.
Russia introduced a zero MET rate on January 1, 2013 for mining of commercial tin ore in the Far East Federal District that is in effect until December 31, 2022. Then projects (with the exception of new projects under investment protection and promotion agreements, which have separate tax breaks) will be taxed at a rate of 8% multiplied by a rent coefficient of 3.5, meaning the rate would be 28%.
In its first reading, the new bill proposed to grant an MET deduction from January 1, 2023 to December 31, 2032 to tin mining projects in the Far East on two conditions: for the whole tax period the taxpayer mining tin could not be a resident of a special economic zone of any type, a resident of the Arctic Zone or a participant in a regional investment project, an investment protection and promotion agreements (IPPA) or a special investment contract (SPIC). Furthermore, the taxpayer themselves or through affiliates would have to mine tin at deposits that are less than 1% depleted, meaning new projects.
The changes approved for the bill's second reading propose to extend the tax break to projects that are up to 20% depleted, meaning existing operations will qualify, and residents of the Arctic Zone will also be able to claim the deduction.
It was reported earlier that the deduction will apply to expenditures on acquisition, construction, manufacture and delivery of fixed assets, as well as expenses on bringing such assets up to a condition suitable for use. These assets must be mining equipment and machinery; road, transport, engineering or energy infrastructure; or production facilities used for processing (enrichment, conversion) tin.
The bill stipulates that the deduction will cover all expenditures on acquisition of fixed assets from January 1, 2023 to January 1, 2028, while from January 1, 2028 the deduction cannot exceed an amount determined as the difference between the amount of tax calculated at a rate of 28% (rent coefficient of 3.5) and a rate of 8% (rent coefficient of 1).
The deduction will not apply in tax periods (a month for the MET) when the price of tin on world markets exceeds 2,818 rubles per kg or 2.818 million rubles per tonne ($45,673). The price of tin on the London Metal Exchange was at $23,331 per tonne on December 1.
Russia's leading tin miner is Rusolovo , a division of Seligdar . The company's key development project is the Pyrkakaiskiye stockworks in Chukotka.