August 9, 2018 / 7:20 PM / 9 months ago

Kremlin considers raising more revenue from mining companies

MOSCOW (Reuters) - Russia is considering propping up the state budget by raising more revenue from metal and mining companies that are earning windfall profits, according to proposals seen by Reuters.

The proposals, which did not explain the mechanism by which the extra revenue would be raised, were set out in a letter to Russian President Vladimir Putin from Kremlin economic aide Andrei Belousov. Three industry sources told Reuters they had either seen the letter or were aware of it.

Russia needs additional budget revenue to meet economic goals set in decrees signed by Putin for his new six-year term. The government has already raised value-added tax, effective from 2019.

Russia could raise around 0.5 trillion roubles ($7.5 billion) a year in extra state revenue from metal firms thanks to market conditions, according to an estimate cited in the copy of the letter seen by Reuters.

However, it noted that this would require a change in policy since there was no mechanism yet in place “for additional withdrawals of super profits in case of spontaneous changes in macroeconomic conditions”.

The letter lists Evraz, NLMK, Nornickel, Severstal, MMK, Mechel, Alrosa, Polyus, Phosagro and Acron as among the targeted companies.

It said the tax burden on the metals and mining companies was well below that on oil and gas firms.

Kremlin spokesman Dmitry Peskov did not respond to a request for comment. Belousov was not immediately available for comment.

Alexei Sazanov, head of the Russian Finance Ministry’s tax department, said he knew nothing about the letter. Nornickel, Severstal and Mechel declined to comment.

Reporting by Gleb Stolyarov, Andrey Kuzmin and Darya Korsunskaya; Additional reporting by Denis Pinchuk; Writing by Maria Kiselyova and Peter Graff

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