Page 17 - RusRPTNov19

In the latest World Bank report Russia inched up three more positions to the 28th place out of 190 economies ranked. Russia made progress in dealing with construction permits, and increased quality control for construction through quality-based inspections, which are two of the subcategories, and aspects of the ranking that Russia is particularly bad at.
Getting electricity also became both cheaper and easier, paying taxes less costly due to higher depreciation rates for fixed assets, while online customs clearances improved trading across borders. All of the mentioned reforms apply both to Moscow and St Petersburg.
In terms of minority shareholder’s interests Russia remained weak at 72nd spot dropping 15 ranks over the year. Despite the customs reforms, international trade also remained poorly ranked at 99th place.
This month Russian Finance Minister Anton Siluanov argued that low investment in Russia was due to the domestic business community not trusting the government .
2.9 The government details Artic oil tax breaks
The Russian government broadly agreed on the key parameters of the tax breaks for Arctic oil and gas extraction, Vedomosti daily and Reuters reported on October 24 citing the Deputy Prime Minister Yuri Trutnev after consultations with the Finance Ministry and the Ministry of Energy.
As reported by bne IntelliNews, RUB2.6 trillion ($40bn) worth of tax breaks for Arctic hydrocarbon extraction and infrastructure projects are at stake. The country's largest crude producer Rosneft could be a major beneficiary, leveraging the state support by selling stakes in its Arctic extraction assets.
Reportedly, the key agreed parameters include tax breaks for onshore Arctic oil fields, including Rosneft's West-Irkinsky and Neftegazholding's (NNK) Payakha.
It was previously reported that Vostok Oil, Rosneft's joint venture with Neftegasholding of veteran oilman Eduard Khudaynatov, might be formed to include the above two fields, as well as Rosneft's Vankor, Lodochnoye and Tagulskoye fields.
BCS Global Markets sees little impact from the news for now, as "higher oil prices remain a prerequisite to the development of such projects and, thus, the tax incentives themselves." The final government's verdict has yet to be announced, the analysts note.
"As far as onshore oil fields are concerned, the Arctic tax breaks that have so far been agreed are somewhat more modest than what Rosneft originally requested for the yet-to-be-formed Vostok Oil JV in July," Sberbank CIB commented on October 25.
Rosneft had requested 30-year tax holidays that included zero MET (mineral extraction tax) for new Arctic fields, lower MET for Vankor, zero property and land taxes, 7% income tax (the standard one is 20%) and a 7.6% insurance contribution (versus the standard 30%), Sberbank reminds.
But the latest reported parameters instead include switching to the new EPT taxation regime (Excess Profit Tax), a zero MET rate for 12 years (or until 1% of reserves have been developed) and a 1% MET rate from the 12th to 17th year, with a gradual increase to the standard rate.
17 RUSSIA Country Report November 2019 www.intellinews.o