March 13, 2017 / 4:23 PM / 2 years ago

Russia postpones scrapping oil export duties to 2022-2025

MOSCOW (Reuters) - Russia will not fully scrap its oil export duty until 2022-2025, Finance Minister Anton Siluanov said on Monday, four years later than previously expected.

Russian Finance Minister Anton Siluanov speaks during a session of the Gaidar Forum 2017 "Russia and the World: Setting Priorities" in Moscow, Russia, January 13, 2017. REUTERS/Sergei Karpukhin

Russia, the world’s biggest oil producer, is in the midst of a so-called “tax manoeuvre” whereby it is gradually increasing its mineral extraction tax (MET), while at the same time cutting export duties on oil and refined products.

Previously the finance ministry had considered cutting the oil export duty to zero between 2018 and 2020.

“We think that oil export duty could be scrapped in full between 2022-2025,” Siluanov told a tax conference organized by the Russian Union of Industrialists and Entrepreneurs.

“We are holding discussions with oil firms and the Energy Ministry and I am sure a relevant decision will be made.”

He declined to specify how much the MET would rise but said the planned increase would be “neutral” for oil and gas companies, given the planned abolition of export duties.

Government officials have said it would be easier to just tax oil and gas producers at home instead of collecting export duties as well. By abolishing oil export duties, Russia would also bring its duties system in line with those of its Custom Union partners Belarus and Kazakhstan.

Oil and gas companies have voiced their support for the tax reform, saying taxing their profits rather than exports and exploration would spur production as it better reflects exploration costs and risks.

In other tax reform, the Russian government is also considering raising value-added tax but lowering mandatory social security payments.

Siluanov said on Monday that such a move could lead to a one-off 2 percentage points rise in consumer inflation.

Reporting by Darya Korsunskaya and Denis Pinchuk; editing by Andrey Ostroukh and Susan Fenton

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