The Russian government has proposed more than $60 billion in tax increases for the oil and gas industry in 2023-2025, the biggest such rises in the country’s history, as it seeks to plug its budget gap, according to a document published.
One of the heftiest burdens was slapped on Kremlin-controlled gas giant Gazprom, which is set to pay an extra 50 billion roubles ($855 million) in mineral extraction tax (MET) each month over the three-year period, according to the proposed tax code changes.
The budget is seen gaining an extra 628 billion roubles in 2023, almost 700 billion roubles in 2024 and 750 billion roubles in 2025 just by increasing MET on natural gas production.
Total additional oil and gas tax revenues are seen at 1.28 trillion roubles next year, 1.13 trillion roubles in 2024 and 1.19 trillion roubles in 2025. Prime Minister Mikhail Mishustin said last week Russia’s budget deficit would come in at 2 per cent of gross domestic product in 2023 before narrowing to 0.7 per cent in 2025.
The tax change bill will go to parliament for debate and then needs to be signed off by President Vladimir Putin.
It also proposes an increase in income tax on producers of liquefied natural gas (LNG), which will yield an additional 200 billion roubles in 2023.
Deputy finance minister Alexei Sazanov said the government is aiming at skimming off windfall profits from oil and gas producers.
“We have discussed all our tax proposals with the relevant entrepreneurs, with business. Of course, they are not thrilled, but understand it,” he was quoted as saying by RIA Novosti news agency.
Separately, Finance Minister Anton Siluanov said on Wednesday that Russia estimates the new cut-off price for its budget rule that diverts excess oil revenues into its wealth fund at $62-$63 per barrel, and may resume foreign currency purchases as early as this year.
The rule, designed to replenish state reserves by buying foreign currency when oil prices are high, was fully suspended amid harsh Western sanctions imposed after Moscow launched what it calls a “special military operation” in Ukraine on Feb. 24.
