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New Tax Treatment of Oil and Gas Industry

New Tax Treatment of Oil and Gas Industry

The decline in oil prices has led Russian oil companies to say that production and export have become unprofitable.

The industry has formulated a clear request to the executive: taxes need to be lowered. And, Vladimir Putin has proved that the oil and gas industry remains his priority.

A plan has been developed to seriously diminish the fiscal burden on the sector. Yet, there remain many questions.

Who will benefit most from the new tax treatment? Will this lead to a rise in investment or primarily a rise in dividend payments to shareholders? What will be the economic and political implications of the innovations?

The answer to these and other questions you will find in the new report.

The report offers an in-depth discussion of the following subjects:

  • Overview of the current tax system implemented during Vladimir Putin’s first term as president

    • The reasons for its appearance, the key lobbyists for it to be implemented
    • Its pros and cons for the industry, the federal budget, and individual corporations
  • Fight for tax reductions: the key players and the disposition of the combat

    • The industry versus the Finance Ministry
    • Putin as an arbiter
    • The role of President Medvedev in tax disputes
    • The struggle between elite clans for tax treatment of the oil and gas sector
    • Pull-down prospects for the “Kudrin scissors” (the mechanism whereby the Finance Ministry expropriates most of oil companies’ profits)
  • New Putin package. Analysis of the most recent tax cut initiatives

    • Reform of the export duty levying system
    • Differentiation of mineral resources extraction tax
    • Tax benefits for eastern and offshore projects
    • Attempts to stimulate the beginning of the development of greenfield sites and the reanimation of brownfield ones
    • Amortisation benefits for oil and gas equipment
    • Key beneficiaries and potential losers
  • The problem of taxation in the market for petroleum products. Struggle for raising gas extraction tax

  • Forecast of developments


The contents of the report:

Introduction 2
Chapter 1. Oil & Gas Sector Taxation System Developed under Vladimir Putin as President 4
Chapter 2. Key Groups of Interests in Fight for Change of Oil & Gas Sector Tax Treatment 11
Chapter 3. Mineral Extraction Tax: new approaches 30
Chapter 4. Export Duties: Putin’s Main Present to Industry 49
Chapter 5. Changes in Tax Treatment of Petroleum Products 60
Conclusion. No Full Stop. Forecast of Developments 68
Date of issue April 30, 2009

If you are interested to obtain please contact » Elena Kim

Other issues:
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Analytical series “The Fuel and Energy Complex of Russia”:

Sanctions against Russian Oil and Gas: Pressure Continued
Arctic: Soviet-type Gigantomania or Breakthrough Project?
State regulation of the oil and gas sector in 2018, prospects for 2019
Gazprom on Path to New Reality
Looking for Best Tax Treatment of Oil and Gas: Fiscal Experiments Continued
The subject of taxation became the absolute hit of 2018. The government once again decided to rewrite the rules of the game. President Putin’s new inauguration decree served as the main pretext. It turned out that about 8 trillion roubles extra was necessary for the new national projects announced. The Cabinet did not take long to decide where the funds should be taken. The result was acceleration of the so-called tax manoeuvre started as far back as 1 January 2015. It suggested shifting the tax burden to the wellhead: the effect on the state budget of gradual abandonment of the export duty will be more than compensated for by quicker growth in mineral resources extraction tax (MRET). The laws on tax reform have already gone through the parliament and will take effect as of next year. This means nothing good for companies.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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