Vedomosti reports that MinFin and Minenergo have agreed on the new version of tax manoeuvres, which suggests a gradual decrease in crude and oil products export duties. The ministries also suggested only a gradual increase in fuel oil export duty (was supposed to be 100% in 2015, now in 2017). This is to be partly offset for the budget by the higher than was planned previously increase in the MET rate (the details are summarised in the table below).
The proposed manoeuvre looks lighter for the industry as a whole compared with what we discussed in our Tax Maneouvres – Episode III – the Phantom Menace of 30 May, where we wrote about the potential further discussions of tax changes in the Russian oil sector and their imminence this year. This is still not the final version of the tax changes suggested, so we might well expect further negotiations on the issue. We remind that despite government claims that all the changes in the taxation (aside from excises growth) were just a reshuffle, in fact normalised for macro and operations, gradual changes to the industry’s tax regime, generated some USD 7.9bn for the budget from 2010 to 2013. There have been some 15 changes to the sector’s taxation since 2010, which we think is negative as it complicates longer term planning and questions investment returns.
Dmitry Loukashov, Ekaterina Rodina, Elena Kopylova, Alexander Donskoy
VTB Capital analyst
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