The Finance Ministry has decided to offer large-scale tax reform in the oil industry

The Finance Ministry has decided to offer large-scale tax reform in the oil industry


Moscow. September 21. Next week on the financial forum, the Ministry of Finance may submit a new design for the taxation of the oil industry, writes the newspaper “Vedomosti”, citing its sources.

Now the Ministry of Finance receives the oil rent through fees and through met. 2016 is maneuver increases the mineral extraction tax and reduced the fee, in 2017 he will be 30%.

The essence of the reform is to get rid of fees completely: the Finance Ministry wants to reset them in 2018 Will be in proportion to the increased severance tax, we are talking about replacing it with a added tax income (JPM). The parameters of the PDM are discussed. At zero duty shall be canceled and all benefits duties.

After completing the maneuver, the Finance Ministry will expand the tax base: fees levied only on petroleum exports, and so the object of taxation becomes entirely produced in the country of oil.

The consequences of change

As the newspaper notes, with reference to employee’s state oil company, such shifts in the industry will affect the refining margin. To duties bound by the formula, the internal price of oil, if you cancel, the price will automatically rise; will disappear and the customs grant, which is produced by the refinery (the difference between the duties on oil and oil products); it allows inefficient refineries to export oil products with a low processing depth.

This will increase the price of gasoline. The government appears a fork in the road, says one of the officials either to allow gasoline prices to rise, which is socially dangerous, either to offset refinery losses and to keep prices down.

To this end, the Finance Ministry proposes to introduce negative excise tax on oil when selling oil companies to give oil refineries the oil excise, which will be paid to the budget, and then the refinery will be able to get a deduction for the amount of the excise tax, but increase the ratio. Compensation must be equal to cancel the fee, according to estimates by consultant of a large company: about $4.5 per barrel in the price of oil at $50 and $3 – at a price of $40. If that’s not enough, it is possible to lower the excise tax on petroleum products.

A negative excise tax will help to clear the market of “samovar” (artisanal refineries), explains the participant of the discussion: incidental, but very important objective of the reform. A mechanism needs to be selective, said participant discussions in the government.

Now a negative excise tax is, for example, petrochemicals producers, and carriers – they need a special registration, to be eligible for a refund. Similarly should there be a separate registration or license of the refinery.

The abolition of subsidies would budget about 600 billion rubles. at $50 per barrel, estimates Finance Ministry official, and through a negative excise tax the budget may return to the refining of approximately 300 billion rubles. as a result, net revenues of the whole operation may reach 300 billion rubles.

The initiative is not new

Large-scale reform with zeroing of duties was discussed more in the strategy-2020. The proposed reform gradual: first maneuver, then the duty is cancelled to “create the right price points, to raise incentives to increase energy efficiency and improve the depth of oil refining”. The reform will contribute to reducing the energy intensity of the Russian economy, will allow to release additional oil resources for export, the authors write strategy. The export duty much less effective than direct targeted subsidies. But the growth of domestic prices of petroleum products could have a negative impact on economic growth, reduce the competitiveness of individual sectors and increase social tensions, stated in strategy 2020: the problem can be solved by including in the reform transition period. However, officials of the Ministry of Finance is adamant: the time is now.

Over the past two years, the average refining margin refineries in Russia decreased from 2500 RUB. per ton to about 800 RUB. – due to the worsening market situation and tax maneuver.

In such circumstances, a radical revision of the tax environment carries the additional risks of imbalances on the regional fuel markets, warns Borisov, possible uncontrolled growth of prices, especially in the case that compensation mechanisms for oil refinery to be inadequate.

The impact on Belarus

Belarusian oil refineries get Russian oil at domestic price, its growth will hit their margin, but no excises no one to compensate them will not. Belarus has expressed its concern knows one of the interlocutors of “Vedomosti”: it is possible that Belarus will receive compensation in the form of some loans.

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