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Additional tax burden in Russia is unreasonable – Dvorkovich

October 21, 2011, 13:05 UTC+3

"The discussion is very simple,” he said. “The finance ministry believes that lowering taxes for new complicated fields will cause money losses"

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MOSCOW, October 21 (Itar-Tass) —— Russia’s presidential aide Arkady Dvorkovich believes it unreasonable to increase further tax burden in Russia.

“We do not need raising, as it is useless,” he told a banking conference on Friday. “It was useless yesterday, is useless today, and will be useless tomorrow.”

Dvorkovich spoke about the oil sector.

“The discussion is very simple,” he said. “The finance ministry believes that lowering taxes for new complicated fields will cause money losses.”

“The logic of companies is different – if taxes are not lowered, they [new complicated fields] will not be delivered, and there will be no money whatsoever,” Dvorkovich said. “The truth must be somewhere in the middle, but we should see to it that the fields are developed, or we do not earn any money at all.”

“If now we follow exclusively the logics of the finance ministry, we do not collect revenues, and if we follow the other logics, we have a chance to collect several hundred billion roubles.”

Deputy Minister of Economic Development Stanislav Voskresensky said that taxation in the oil sector had been changed: the government raised export duties on oil products and at the same time unified the duties on dark and light oil products, lowered export duties on oil /’60-66’ system/. Thus, export duties are major payments which oil companies make. The fiscal effect is null, though there is certain system effect: this brings many Russian deposits from the so-called red zone, where oil companies generate negative cash flows. On the other hand, it dissimulates cheaters, who pretend to be exporting black oil, but in reality simply use the beneficial export duty on oil, he said.

As for new deposits, the ministry of economic development and the finance ministry are adamant that “they may use the tax system, which experts have been discussing for some time – [to introduce] a tax on added income,” Voskresensky said.

“The problem of new deposits is not that they are new, but that they, as a rule, are situated in places with no infrastructure, which require a different level of capital expenses for development,” he added.

“This is what we have suggested, and the work continues,” he said adding that the work involves ministries of energy, economic development and finances.

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