Tax deductions for oil and gas to rise 19% to 436 bln rubles in 2024, then fall - Finance Ministry estimate
MOSCOW. Oct 3 (Interfax) - Tax deductions for the Russian oil and gas industry should rise 19% year-on-year to 436 billion rubles in 2024, while deductions should fall below this year's levels in 2025-2026, the Finance Ministry forecasts.
The report on assessing Russian government tax expenditures was published on Monday as part of the "budget package" of documents submitted to the State Duma.
The concept of "tax expense" was implemented in the Budget Code in 2018; and it is the shortfall in budget revenues resulting from tax concessions.
According to the Finance Ministry, tax deductions in the oil and gas sector are consistently growing from 88 billion rubles in 2020, to 217 billion rubles in 2021, 277 billion rubles in 2022, and are estimated at 365 billion rubles in 2023. Deductions are forecast at 436 billion rubles in 2024, at 337 billion rubles in 2025, and at 309 billion rubles in 2026.
The mineral extraction tax (MET) deduction for the Vankor deposit, introduced indefinitely as of April 1, 2020, is forecast at 158 billion rubles in 2023, 222 billion rubles in 2024, 221 billion rubles in 2025, and 210 billion rubles in 2026. The MET deduction for the Rosneft Priobskoye field in the Khanty-Mansiysk Autonomous District (KhMAD), as introduced on January 1, 2021, is set at the fixed level of 45.96 billion rubles per annum; and for the Gazprom Neft Priobskoye field, as introduced on January 1, 2022, at 9.996 billion rubles per annum. The deduction for the Samotlor field is also a fixed 35 billion rubles per annum. These deductions are linked to a baseline oil price of $45.04 per barrel, with annual indexation by 2% starting on January 1, 2024. This price was set at a fixed amount in April 2023, specifically for applying the oil and gas deductions, which are applicable only when prices exceed the baseline price.
The materials estimate the amount of tax deductions for oil production in the Irkutsk Region for taxpayers implementing projects to create new production facilities for processing ethane and liquefied petroleum gas (LPG). The amount is 60 billion rubles in 2023 and 2024, and it was 25 billion rubles in 2022, having been implemented on July 1, 2022. This involves implementing the law passed in the summer of 2021 on providing the MET deduction to the Irkutsk Oil Company (INK) until December 31, 2024, in order to finance the construction of an ethane and LPG processing plant. Moreover, the company will have to compensate for the benefit through an increased MET as of 2025. The Finance Ministry calculates that the budget should receive 38.4 billion rubles in 2025 and 44.4 billion rubles in 2026.
The MET tax deduction for producing ultra-viscous oil in Tatarstan, whose main developer is Tatneft , could total 10.7 billion rubles in 2023, 12 billion rubles in each of 2024 and 2025, and 1.3 billion rubles in 2026, This involves deductions for expenses that the company invests in environmental protection and ensuring industrial safety.
