Russian govt approves bill on provision of reverse excise for synthetic rubber in 2024

MOSCOW. April 21 (Interfax) - The Russian government has approved a bill to provide reverse excise duty for synthetic rubber producers starting January 1, 2024, when they conclude an agreement with the Russian Ministry of Energy, the press service of the Russian Ministry of Finance reported.

The excise tax will depend on the exchange prices for natural rubber in the Singapore market, as well as butane and butadiene in the Rotterdam market.

"If exchange prices are unfavorable, manufacturers will receive a reverse excise tax on synthetic rubber from the budget. If the exchange situation is good, manufacturers will pay excise within the limits of the previously reimbursed excise with indexation, which will reduce budget spending on the specified support measure. The maximum amount of compensation is set at 9,000 rubles. 150 rubles per tonne of rubber produced," the report says.

The deadline for the manufacturer's agreement with the Russian Ministry of Energy is 10 years. By signing the agreement, the companies will undertake to return the previously refunded excise tax if it is terminated or expires.

For the first time, the Ministry of Finance announced the initiative to introduce a reverse excise tax on synthetic rubber in April 2021.

The changes were supposed to provide for the taxation of these transactions depending on the exchange price of natural rubber in foreign markets, "based on the need to ensure long-term neutrality for the federal budget and synthetic rubber manufacturing companies when using such a mechanism." The Ministry of Finance agreed to allocate up to 3 billion rubles annually for these purposes.

Deputy Finance Minister Aleksey Sazanov explained at the time that the reverse excise tax would involve a damping mechanism, which "in the medium term should equally likely work both in plus and minus."

After the purchase of TAIF, Sibur became the largest producer of synthetic rubber in Russia. Synthetic rubber is also produced by enterprises in the Titan Group, Tatneft and a number of other companies.