Main page > Products > The fuel and energy complex of Russia - Series of analytical reports > Tax maneuver: fiscal policy in the oil and gas sector, prospects of changes

Tax maneuver: fiscal policy in the oil and gas sector, prospects of changes

Tax maneuver: fiscal policy in the oil and gas sector, prospects of changes

Taxation is one of the key problems in the sector. Oil companies have long been struggling for changes in the fiscal philosophy. They suggest that the “Kudrin scissors” that took away incomes of oil companies by taxing their revenues should be replaced with taxation of profits. And it is indeed a big difference.

The sector long ago turned into the main supplier of the money to the state budget; however, the outstanding question is about prospects of the sector. Oil production has reached its peak and its possible decline is becoming more and more plausible, unfortunately. And it will lead to serious problems in the budget sphere.

There is little time left for reforms. However, the finance ministry is defending its stance. Instead of changes in the fiscal approach the sector encountered a tax maneuver that somewhat altered the rules of the game but absolutely did not amend the approach towards fiscal regulations in the oil industry. Very soon it turned out that the maneuver was not achieving the intended results.

However, this summer oil producers secured a tactical victory over the finance ministry. It was decided to carry out an experiment at a number of projects by taxing their financial results. The question is how long this trial will last? How long will it take to spread the novelties widely, and will they manage to put an end to growing negative tendencies?

The report elaborates on the following issues:

  • Tax maneuver and its consequences

    • Initial outcomes of its application
    • Low world oil prices and their influence on the situation
  • Influence of the maneuver on the balance of production and exports of oil and oil products

    • Consequences for main players in the sector: winners and losers
  • Positions of main players towards fiscal procedures

    • Opinions of companies and the energy and finance ministries
    • Putin as supreme arbiter – evolution of the president’s view on taxation in the oil industry
  • Experiment with taxation of financial results

    • The essence of the decisions made, selection of projects and expected outcomes
  • Other possible ways of transformation of the taxation system in the oil and gas sector

  • Taxation in the gas sector, latest tendencies

  • System of preferences and exceptions

    • Review of special taxation procedures for oil projects
    • Tax preferences as typically Russian administrative way to solve problems
  • Medium-term forecast of developments

Contents of the report:

Introduction 3
Chapter 1. STATE VISION OF TAX SYSTEM IN NEW ECONOMIC CONDITIONS 5
Chapter 2. FIRST RESULTS OF THE TAX MANEUVER 16
Chapter 3. TAX ON FINANCIAL RESULT: NEW PHILOSOPHY OF TAXATION OR ANOTHER MECHANISM OF PREFERENCES? 33
Chapter 4. MECHANISM OF TAX PREFERENCES: MAIN INSTRUMENT OF PROTECTION 46
Chapter 5. FIRST RESULTS OF THE NEW TAX SYSTEM IN THE GAS SECTOR 54
FURTHER DEVELOPMENTS 61
Date of release: September 14, 2015

If you are interested to obtain please contact » Elena Kim

Other issues:
Bookmark and Share

Analytical series “The Fuel and Energy Complex of Russia”:

New OPEC+ Deal and Future of Oil Business in Russia
Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

Rambler's Top100
About us | Products | Comments | Services | Books | Conferences | Our clients | Price list | Site map | Contacts
Consulting services, political risks assessment on the Fuel & Energy Industry, concern of pilitical and economic Elite within the Oil-and-Gas sector.
National Energy Security Fund © 2007

LiveInternet