The government will be cancelling a number of tax incentives related to MET and oil export tax

The government will be cancelling a number of tax incentives related to MET and oil export tax

The government of the Russian Federation has decided to cancel a number of incentives related to the Mineral Extraction Tax (MET) for deposits of super viscous oil and export tax on oil for mature fields, according to Anton Siluanov, the Minister of Finance. After the cancellation of MET incentives, companies will be offered an option to switch to the Excess-Profits Tax (EPT). Additional budget income will amount to about 260 billion rubles per year.

"As for MET, we have agreed to reconsider a number of incentives that are not effective as far as we believe. We are talking about depleted deposits and deposits with super-viscous oil. The incentive for export duty will be cancelled for mature deposits. We predict that additional profits from this measure will amount to about 30 billion rubles," Siluanov said to journalists (quoted from TASS).

According to his words, the cancellation of MET incentives will lead to an increase in budget income in the amount of about 80 billion rubles per year; with regard to depleted deposits with the switch to EPT - to about 100 billion rubles; with regard to changes in EPT parameters in general - to about 80 billion rubles additionally.

The head of the Ministry of Finance noted that the provided deductions do not reflect the actual degree of depletion of deposits and do not lead to an increase in investments, even though they are intended for this purpose. "If we don't see that an incentive works for the creation of new workplaces, for growth, we believe that such an incentive has to be cancelled," Anton Siluanov emphasized.

"Speaking of new incentives, if they are provided with regard to Taymyr and Priobskoe, they will be accompanied by investment agreements and strict control of the Ministry of Finance," the Minister added. According to him, a special department has been created in the Ministry for this purpose.

Let us note that the Ministry of Finance suggests a 3.5X increase in the MET rate for ores of ferrous and non-ferrous metals, multi-component complex ores, apatite and phosphorite ores, and potassium salts. On September 16, the Russian Union of Industrialists and Entrepreneurs wrote a letter to Mikhail Mishustin, the Prime Minister, asking him to reject the legislative draft of the Ministry of Finance on the growth of MET for these industries ("Kommersant")