The government introduced amendments to the Tax Code to the State Duma, returning the fuel damper in full from October. It also involves a new calculation of the price of Urals oil for calculating the mineral extraction tax (MET), and an increase in the MET on condensate for Gazprom. Interfax and TASS reported this with reference to the document. According to TASS, the State Duma Committee on Budget and Taxes approved the amendments.
According to TASS, the amendments were developed for the second reading of the bill on changes to the Tax Code. They revert to using a factor of 1 instead of 0.5 from October 1, 2023 inclusive. The document also provides for a new calculation of the price of Russian Urals oil for calculating the mineral extraction tax (MET) on oil. The document proposes to calculate the price based on the arithmetic average price for deliveries to ports in the northwest and south of the country, increased by the price of transportation by sea to Rotterdam and Mediterranean ports.
The agencies note that the amendments also increase the mineral extraction tax on Gazprom’s gas condensate by a factor equal to the Kabdt coefficient multiplied by 1.5, which characterizes surcharges for gasoline and diesel fuel and is used when calculating the mineral extraction tax on oil. The document notes that this increase does not apply to companies whose gas production is less than 35% of total hydrocarbon production.
According to Interfax, the law provides for a new calculation of the price of Russian Urals oil to calculate the mineral extraction tax on oil. When calculating oil taxes, quotes from the Argus pricing agency will continue to be used, but now not on a CIF basis (includes freight costs and insurance) in the European ports of Rotterdam and Augusta, but on a FOB basis (cost of oil before loading) in Russian ports.
On November 1, Reuters reported that if the State Duma approves the bill on the return of damper payments to oil refiners, the Russian budget will spend about 0.4 trillion rubles in January 2024. In addition, the budget will lose another 0.35 trillion rubles. due to reduced taxes on oil production.
Earlier, Kommersant reported about the government’s plans to introduce amendments to compensate budget expenses for payments to refineries for supplies to the domestic market. According to Kommersant’s sources, most of the costs for the damper are planned to be compensated by Gazprom, by increasing the mineral extraction tax on gas and gas condensate, since the gas company processes it at plants that receive the fuel damper.
Read more in the article “Gazprom is always alone.”