Page 9 - FSUOGM Week 31 2021

FSUOGM POLICY FSUOGM

Russia expects profit tax to cover

25-30% of oilfields by year-end

RUSSIA RUSSIA plans to transfer around 25-30% of its The finance ministry was initially no fan of
oilfields to its new excess profit tax (EPT) system EPT, with Sazanov himself estimating last year
Moscow launched the by the end of the year, Deputy Finance Minister that the system had cost the Russian budget
EPT system in 2019. Alexei Sazanov said on July 30. some RUB213bn ($3.05bn) since its trial launch
Moscow launched the EPT system in 2019, in 2019. He described its introduction as the big-
envisaging it as an eventual replacement of gest mistake in his career.
export duties and mineral extraction tax (MET) As part of its taxation overhaul last year, how-
that have long served as the primary way that ever, the finance ministry tweaked the system to
Russia collects tax receipts from its oil resources. ensure that it generated more tax payments, and
The finance ministry implemented a rapid over- is now happy to see more projects transferred to
haul of oil taxation that stripped many projects it.
of the breaks from export duties and MET they There have been numerous dramatic changes
enjoyed. This has prompted operators to move in Russian oil taxation over the years, and oper-
more fields over to the EPT system, to reduce ators claim this has hindered their investment
their taxable base. plans, as they cannot count on fiscal conditions
“Quite a lot of fields have already been trans- remaining similar throughout the lifetime of
ferred to the EPT,” Sazanov told reporters at their projects.
TASS. “I think that by the end of this year, taking Hardest hit by the finance ministry’s revi-
into account the transfer of depleted fields to the sions last year were Tatneft and Lukoil, while
EPT, we can expect that about 25-30% of fields state-owned Rosneft, the country’s biggest oil
will come under the system.” producer, got off comparatively well. ™

Week 31 03•August•2021 www. NEWSBASE .com P9