7 Nov 2023 18:53

Urals discount to Brent in calculating oil taxes should be set only for 2024 - Makarov

MOSCOW. Nov 7 (Interfax) - The Urals discount price to Brent as proposed by the Russian Finance Ministry for calculating oil taxes should be set only for 2024, and not for a three-year period, head of the State Duma budget committee Andrey Makarov said during a committee meeting on Tuesday, and the ministry has agreed to discuss the proposal.

The proposal was made as part of the discussion for the second reading of government amendments to tax bill No. 448566-8 introduced as part of the "budget package".

According to the document, the Urals discount to the Brent world benchmark when calculating oil taxes reduces from $20 per barrel to $15 per barrel in 2024, to $10 per barrel in 2025, and to $6 per barrel in 2026. The State Duma had previously implemented a law on reducing the Urals discount to the Brent benchmark from $25 per barrel to $20 per barrel for tax purposes as of September 1, 2023.

"Tell me, please, but essentially where did the right of the government to establish one of the elements of taxation come from?" Makarov asked Deputy Finance Minister Alexei Sazanov.

"This is a reaction to the comments of individual entities in the event that when the actual discount on Russian oil is greater than the discount that is used for taxes that this is not an excessive burden on taxpayers, and prompt response measures are necessary," Sazanov replied.

"We have a norm that the element of taxation is a clean base; they can only be changed by laws," Makarov objected.

"In this case, the maximum discount is established by law, and the government is given the opportunity to increase it up to $20, that is, to the level established in the Tax Code this year. This was precisely the request of many taxpayers and constituent entities of the Russian Federation," Sazanov answered.

"If you are saying that you are establishing this right for one year, then why are you establishing this right for yourself for another two years. Just in case, if it happens to come in handy next year?" Makarov asked.

"We cannot foresee what the discount will be, and so that we have the opportunity to react quickly in advance and not allow that if the discount is significantly higher than what is provided for in the Tax Code, then a situation could arise when the proceeds are not enough to pay taxes," Sazanov explained.

"And you do not think that it is correct to grant this right for 2024 as a feature of the 2024 budget, and if the situation changes, then, accordingly, extend it further. You do not think that this would be better than just saying right away that we will have it no other way for three years?" Makarov suggested.

"It's a fair point, in this case there was a compromise with the sector," Sazanov said. "Yes, there is a certain need, but let's just have it for 2024. Do you really think that we will have this situation for all three years? Maybe it will change somehow?" Makarov said.

"We will discuss your proposal," Sazanov said.