Page 15 - RusRPTAug21

start to see compliance slip, and the deal slowly fall apart. This would be a scenario that OPEC+ would want to avoid, given that there is still a large amount of uncertainty over the demand outlook.
2.4 Government to increase tax burden by 20% by 2024
As part of the preparation of the federal budget for 2022–2024 and the assessment of the outlook for the entire public finances (including the budgets of regions and municipalities and state social funds), the government has discussed certain tax increases. They aim to increase general government revenue by 20% of GDP by 2024.
The amount is fairly evenly divided into four parts. A production tax on metals is planned to be increased, and the application of a profit tax on oil production is expected to expand. More revenue from excise duties is planned through tax increases and improved tax collection, mainly for alcohol and sugary beverages. In addition, tax increases are planned for high-income or wealthy individuals. VAT will be abolished for large catering businesses and the 30% social tax on their salaries will be halved. More comprehensive information on next year's tax changes has not been released at this stage.
Every year, the budget includes tax increases and reductions. For example, in the autumn of last year, the Ministry of Finance estimated that tax increases would lead to an increase in general government revenue of about 0.4% of GDP in 2021–2023, if e.g. The reduction of tax cuts granted to oil fields will be implemented as planned, and the taxation of income from Russian capital abroad can be raised, e.g. new tax treaties with some countries considered to be tax havens. The revenue shortfall was estimated at 0.4% of GDP due to the halving of the overall 30% level of social taxes for small and medium-sized enterprises.
The now planned increases in taxes on the production of metals would follow on from the decision already made to extend export duties on metals from the beginning of August to the end of this year. There are two aspects to the increases in the metal sector. Metal prices have risen sharply on the world market and, consequently, domestically, and the increases are intended to curb domestic prices by restricting exports. At the same time, the aim is to tax profits accruing to metal companies from high prices.
Increasing taxation on the production and export of metals has been called for from time to time for quite some time, and not without justification. In 2018, a list was drawn up in the Kremlin of designated companies in the metals, petrochemical and chemical industries whose profits from high export prices, which were considered excessive, were to be taxed at more than half a% of GDP. Accompanied by industry objections, the list plan did not progress. A permanent change in taxation is planned for the metals sector, which could become similar to that for the oil and gas sectors. For a couple of decades now, oil and gas have been taxed with production taxes and export duties, which, without separate decisions, rise according to certain calculation formulas as world market prices rise (and also progressively).
15 RUSSIA Country Report August 2021 www.intellinews.com