PhosAgro asks Russian govt to lower windfall tax by amount of export duties in 2023 - source

MOSCOW. April 11 (Interfax) - Fertilizer producer PhosAgro has asked the Russian authorities to reduce the windfall tax on the company by the amount of export duties paid in 2023, a source told Interfax, citing a letter PhosAgro CEO Mikhail Rybnikov sent to the Kremlin administration.

Rybnikov said in the letter that the windfall tax that is in the works duplicates the export duties imposed as of January 1, 2023 as an instrument to collect windfall profits from the growth of world fertilizer prices in 2021-2022.

PhosAgro paid 1.9 billion rubles in export duties in the first two months of 2023 and estimates it will pay 6 billion rubles in the first half of the year, the source said, citing the letter.

Rybnikov also said that since fertilizer prices for Russian farmers were fixed in 2021-2022 it essentially subsidized them to the tune of 26 billion rubles compared to world prices.

Relevant government agencies were instructed to look into PhosAgro's request by the beginning of April, the informed source said. The company declined to comment.

Rybnikov appealed to President Vladimir Putin at the end of last year to revise the parameters of the export duties on fertilizer imposed as of January 1. He asked for the cut-off price for nitrogen and potash fertilizers to be lowered, as prices for them had fallen steeply and with the current parameters they are not charged the duty. This discriminates against "more technological but lower-margin" producers of phosphate and compound fertilizers, Rybnikov said.

Relevant agencies discussed revising the export duties, but a decision was not made, a source familiar with the discussions told Interfax.

The parameters of the windfall tax have still not been agreed, the head of the Russian Union of Industrialists and Entrepreneurs (RSPP), Alexander Shokhin said last week.

It is currently presumed that the tax will be a one-off payment of about 5% of the amount by which profits for 2021-2022 exceeded profits for 2018-2019. The exact percentage will be calculated taking into account that the fact that the Finance Ministry expects to raise about 300 billion rubles with the tax. Finance Minister Anton Siluanov confirmed that this was the expected amount in mid-March.

The amendments to the Tax Code will legally go into effect in 2024, but the ministry actually already expects to receive the funds at the end of 2023. The ministry intends for advance payments to benefit businesses; Shokhin said earlier that companies would be willing to pay in advance given a discount.

The pool of those who will pay the tax is expected to include all companies and banks with net pretax profit of more than 1 billion rubles in 2021-2022, except oil, gas and coal companies and small and medium businesses.