HomeMediaLatest NewsThe approach to calculating taxes for the oil industry may be changed In Russia

The approach to calculating taxes for the oil industry may be changed In Russia

03 February 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Business FM on the possibility of linking the price of oil used for tax purposes in Russia to one of the reference grades of oil.

Previously, Russian oil went mainly to Europe, and there were no problems with calculating the price. Now it is being sold to Asia, the largest buyers are China and India. And they don't want to disclose the details of the contracts. There is a situation that Russian companies may underestimate the cost of raw materials. There are two reasons for this: either fears that transactions may fall under the sanctions ceiling, or, perhaps, to pay less taxes. But since the budget needs money, the state decided to change the method of calculating the price. According to Kommersant, quotes of the benchmark Brent North Sea mixture will probably be used, while the authorities themselves will determine the size of the discount and the cost of freight. Alexey Belogoryev discusses this idea:

"The idea is quite natural, it could not fail to appear, but it is fraught with many dangers, primarily for oil companies. They either have to somehow show the Ministry of Finance their real economy of supplies, or offer some version of their own. Because it is obvious that the current situation with oil prices, which taxation focuses on, is unnatural, it does not reflect the real situation on the market. But the proposal of the Ministry of Finance also does not look optimal."

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