Mineral Extraction Tax


Natural resources remain the main source of revenue for the budget system of the Russian Federation. Particular attention is paid to the taxation system for mining, in the exploitation sectors of which significant rental income is generated. In the framework of further improving the taxation of hydrocarbon production, it is proposed:

1. In order to rationally use energy resources and reasonably reduce the tax burden on the oil industry in terms of mineral extraction tax, as well as create incentives for developing high-cost deposits, tax holidays will be introduced for oil production at new fields located in Chernoy and Sea of ​​Okhotsk. The indicated exemption in the form of a zero rate will be granted for a period of 10 or 15 years (depending on the type of license) until the accumulated production volume in the subsoil plot reaches 20 million tons for the Black Sea and 30 million tons for the Sea of ​​Okhotsk.

2. In order to create incentives for the development of small fields, it is proposed to introduce lowering coefficients for oil production at such fields.

3. In the framework of increasing the efficiency of use of natural resources in the Russian Federation, it is proposed to continue work on creating tax and financial incentives for the utilization of associated petroleum gas, as well as to consider the abolition of the zero rate from actual oil losses and taxation of oil produced at the wellhead with the creation of appropriate systems metering oil and associated gas.

4. In the past period, a gradual increase in the prices of combustible natural gas continued. Since January 1, 2006, wholesale gas prices have increased by at least two times, while the mineral extraction tax rate remained unchanged in this period. In addition, the tax burden on economic agents engaged in oil production exceeds the tax burden on economic agents engaged in natural gas production. Under these conditions, gas industry enterprises have significant rental income, which is expected to be withdrawn from January 1, 2010 using the mineral extraction tax rate, which will be indexed annually in accordance with the dynamics of domestic gas prices.

5. Within the framework of further improvement of the taxation procedure for mineral extraction, it is proposed to develop and consolidate from 2010 – 2011 in the legislation on taxes and duties a mechanism to create tax incentives for oil production from complex fields, which will significantly increase the efficiency of field development.

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