Russia Oil Tax Move May Require Compensation, Kudrin Says

Russia’s plan to restructure taxes on crude oil and refined oil products may require compensation for some companies, Finance Minister Alexei Kudrin said today in London.

“Overall this switch is correct and perhaps somewhat overdue,” Kudrin told reporters today in London. It will be implemented “along with compensation measures or as a step-by- step transition,” Kudrin said.
The ministry’s “60-66” proposal to restructure taxes on oil companies would lower the coefficient used in setting the crude export duty to 60 percent while taxing oil products at 66 percent of the crude levy. Russia, which exports more crude and heavy fuel than high-grade products, is seeking to revise taxes to spur output and bolster state revenue as global oil prices climb.
Prime Minister Vladimir Putin today expressed support for the move and called for the government to submit a proposal on implementing the measure within two weeks.
This transition has been “delayed” because it means “big costs for companies, which endanger the stability of their work,” Kudrin said. The government is working on a plan to ensure their stability won’t be compromised in this transition, he said.
Refiners such as TAIF, based in Russia’s Tatarstan region, which haven’t upgraded plants to produce lighter fuels, face a higher tax burden should the proposal be approved.
Kudrin said he couldn’t give a date for when the 60-66 tax structure will go into effect.
Source: Bloomberg