Russia May Phase Out Oil Export Duty by Raising Extraction Tax

Russia may gradually phase out oil export duties while increasing the mineral extraction tax, according to Anton Siluanov, finance minister for the world’s largest oil-producing nation.

The ministry’s proposals on lowering the export duty rate by about 2-3 percent points annually, starting as early as next year, will probably be ready in mid-May, Ilya Trunin, head of the ministry’s tax department, told reporters in Moscow.

At the same time, the mineral extraction tax would be raised to compensate the budget for any losses from the measures, he said.

Russia’s oil industry has sought tax relief as Soviet-era deposits age and the need to tap new fields in remote regions raises the cost of maintaining production. Russia, which relies on crude and gas revenues for about half of its revenue, has little room to give the industry breaks with the budget in deficit and amid large-scale spending on projects such as the 2014 Winter Olympics and 2018 World Cup.

The proposal would the lower crude export duty rate to 57 percent to 58 percent of crude prices from the current 60 percent, Trunin said. It would also lower rates for refined product, which are calculated as a fraction of crude.

To contact the reporters on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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