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Tax maneuvre in oil industry not to affect federal budget — finance minister

The better part of the export duties that will be left to Belarus — $1.5 billion — has been taken into account, Russian Finance Minister Anton Siluanov says
Russian Finance Minister Anton Siluanov ITAR-TASS/Stanislav Krasilnikov
Russian Finance Minister Anton Siluanov
© ITAR-TASS/Stanislav Krasilnikov

WASHINGTON, October 10. /TASS/. Keeping 100% of export duties on petroleum products by Belarus will not considerably affect the Russian federal budget, Russian Finance Minister Anton Siluanov told journalists on Friday.

He said that the Belarusian duties have been partially included in the 2015 budget. “We will partially look for additional revenues and compensate for the items we have not included in the budget,” Siluanov said. “The better part of the export duties that will be left to Belarus — $1.5 billion — has been taken into account,” the minister said. “The remaining sum is considerably smaller,” he added.

Thus, the Russian Finance Ministry will have to look for sources of additional revenues for the budget compensation. “The revenues are fairly volatile, they are based on the macroeconomic forecast, the oil price has dwindled, so we will get additional revenues from the exchange rate, because 37.7 (rubles to the dollar rate) was budgeted, and now we already have 40,” Siluanov said.

As TASS reported earlier, Russia and Belarus agreed on October 8 that in 2015, all taxes on oil products produced in Belarus from Russian oil and exported to third countries would go to the Belarusian budget.

Siluanov said that due to the oil industry tax maneuvre, Russia would supply oil to Belarus at a higher price in view of the fact that the internal oil price increased by the mineral extraction tax (MET) value. Russia will also reduce export duties. “And as Belarusian export duties are the same as in Russia, its profits will also be reduced,” he said. “To level out the balance of payments and partly compensate for a shortfall in Belarusian budget revenues, the sides reached an agreement that in 2015 Belarus will keep the duties that it receives from exporting its oil products.”

Oil supplies to Belarus — a member of the Common Economic Space — that are processed at Belarusian refineries are not taxable. Under the existing pattern Minsk compensates for Russia’s losses resulting from the exemption by transferring to the Russian budget half of the taxes on the export of oil products that the Belarusian refineries produce from Russian oil (about $1.5 million).

This compensation pattern overlaps with the Russian government-approved “tax maneuvre” in the oil industry — a reduction of taxes and simultaneous increase in the mineral resources production tax, aimed at pushing up Russia’s internal prices of oil, which is also effective for Belarus. The profitability of Belarusian oil refineries would fall and the industry might lose about $1 billion, Belarusian President Alexander Lukashenko said earlier.