31 Jul 2023 16:49

Law amending fuel damper, boosting excise taxes in Russia adopted

MOSCOW. July 31 (Interfax) - Federal Law No. 389-FZ has been adopted, amending the Russia Tax Code, particularly with a number of changes relating to the oil industry. The law signed by the Russian president is posted on the official legal information website.

The amendments (N369931-8) were introduced by the government as part of the implementation of the main vectors of tax policy.

It is envisaged that fuel damper payments to oil companies will be reduced twofold from September 2023 to the end of 2026.

Earlier, the Finance Ministry noted that the fuel damper currently contributes to refiners' margins, and halving it was proposed in order to correct this situation. As a result of such an adjustment, payments to oil companies from the budget will be reduced by 30 billion rubles per month. At the same time, it will be important for the Federal Antimonopoly Service to ensure that after changes in the damper there will be no attempts to raise prices for petroleum products.

The adopted law also sets the indicative price of gasoline in the domestic market in 2026 to calculate the damper at 67,300 rubles per tonne (60,450 rubles in 2025), the indicative price of diesel fuel in the domestic market in 2026 at 58,950 rubles per tonne (57,200 in 2025). The indicative price for calculating the damper on kerosene for 2026 is set at 67,300 rubles (64,700 rubles in 2025)

Excise duties on gasoline and diesel fuel have been hiked 0.9 percentage points in 2024 from previously planned levels (i.e. indexation will be 4.9%, not 4%), in 2025 and 2026 indexation will be 4% more than new proposed levels (previously indexation of 4% was also envisaged for 2025).

According to the document, the excise duty on gasoline below class 5 in 2024 is to be 15,458 per tonne, while current legislation envisaged an increase to 15,325 rubles per tonne (an increase of 0.9 p.p.), while the excise duty for 2025 will increase from 15,938 rubles to 16,076 rubles per tonne (an indexation of 4%), and the excise duty for 2026 is proposed at 16,719 per tonne (indexation of 4% relative to 2025).

The same indexation is proposed for gasoline above class 5, diesel fuel and motor oils. Excise rates on jet fuel should remain unchanged at 2,800 rubles per tonne.

The damper mechanism for petroleum products has been in effect in Russia since 2019. Until April 2023, it was calculated based on the difference between the export price of fuel and the indicative domestic price (designated by law). If this difference was positive and exports became more profitable than supplies to the domestic market, the state paid oil companies, if the difference was negative - oil companies paid into the budget. However, sanctions against Russia made calculation of the export value of Russian petroleum products inappropriate, and Russian Urals oil began to be traded at a discount.