14 Feb 2023 18:47

Oil and gas tax innovations will not affect output, cumulative fiscal effect over 600 bln rubles in 2023

MOSCOW. Feb 14 (Interfax) - The cumulative fiscal effect from the introduction of a discount against the price of Urals crude in oil taxation this year will be over 600 billion rubles, Deputy Russian Finance Minister Mikhail Kotyukov said.

"We expect the cumulative fiscal effect in 2023 to be more than 600 billion rubles due to all proposals. Secondly, we work on the basis these adjustments - tweaks to the tax regime - will not have an adverse impact oil sector output," he said at a meeting of the committee on budget and taxes.

The innovations in question are to be found in two bills introduced to the parliament at the end of last week.

One of them, No. 294475-8, limits the Brent discount to Urals for calculating the mineral extraction tax (MET) and excess profit tax (EPT), and the reverse oil excise. For the calculation, the proposal to use Urals crude prices in the actual amount, which should not be lower than the price of Brent minus $34 per barrel for April, Brent minus $31 per barrel for May, Brent minus $28 for June and Brent minus $25 for July.

Another proposal would increase the price differential used to calculate the gasoline damper from $20 to $25 per barrel, and introduce a price differential when calculating diesel fuel damper, setting a limit of $10 per barrel from April 1 to December 31, 2023.

The other bill, No. 294475-8, would grant oil producer Gazprom Neft an MET deduction of 1.1 billion rubles per month from April 1, 2023 to March 31, 2029 or 79.2 billion rubles for the whole period to carry out projects on the Yamal peninsula. The bill also sets out a mechanism for repaying the tax credit to the government in the period from January 1, 2029 through December 31, 2034 in an amount equal to the received tax deduction indexed by 9%. The tax deduction will not be provided if the oil price is lower than or equal to a cut-off price of $45.04 per barrel in 2023.