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Russian government approves draft law on new taxes for oil companies

November 23, 14:47 UTC+3

The new mechanism can therefore start working from January 1, 2019

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MOSCOW, November 23. /TASS/. The Russian government approved a draft law on the additional income tax (AIT) in the oil sector subject to assignments given by Prime Minister Dmitry Medvedev after the meeting with chief executives of oil majors on November 21 in Khanty-Mansiysk, Russia’s Minister for Open Government Affairs Mikhail Abyzov told reporters on Thursday.

"Regarding the tax, it was approved subject to additional assignments in accordance with results of the meeting held by the prime minister in Khanty-Mansiysk," the minister said responding to a question whether the Cabinet approved the draft law on AIT today.

The Energy Ministry requested the government earlier to support the draft law and discuss it at the Cabinet meeting, so that the State Duma can pass it already in the first quarter of 2018. The new mechanism can therefore start working from January 1, 2019.

The AIT is called to partly replace the Mineral Extraction Tax. MET payment will remain but at a lower rate. The AIT rate will be 50% levied on revenues from oil sales net of export duty, lowered MET, lifting and transportation costs.

The AIT will cover four groups of oilfields. The first group comprises greenfields in East Siberia with depletion not above 5%, the second group covers fields with an export duty benefit, the third group includes brownfields in West Siberia with depletion from 10% to 80% and production quote not above 15 mln tonnes, and the fourth group comprises West Siberia greenfields with depletion less than 5% and total reserves not above 50 mln tonnes per year.

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