15.06.2018
15.06.2018; Portal for subsoil users - dprom.online: https://dprom.online/2018/06/15/ndd-plyusy-i-minusy-eksperimenta/
The Russian economy has always been heavily dependent on hydrocarbon production. At the same time, in the current conditions, it is becoming increasingly difficult for oil companies to increase their volumes. It has become unprofitable for subsoil users to invest in old projects, and it is expensive to develop new ones for the majority. The tax on added income is called to correct the situation. As planned, it will partially replace the mineral extraction tax, enriching the treasury by a trillion rubles, and oil reserves by 100 million tons. It was decided to develop a pilot version of the new law in 2019. In the meantime, the reform is waiting for its adoption in the State Duma, discussions around it continue.
"Individual" tax
The mineral extraction tax became the leading one in the oil industry in 2001. For more than 16 years, its imperfections have been repeatedly revealed, but no one has fundamentally changed the system. The main disadvantage of the MET is that it does not take into account the costs of companies for the development of fields, but is charged based on the volume of oil produced or exported. This approach inevitably leads to the unprofitability of developing both unconventional hydrocarbon reserves and new fields with complex climatic conditions. It does not contribute to the increase in production in developed areas. That's why profitable option companies began to take on only profitable and risk-free projects. To avoid a serious drop in production and reduction budget revenues, The Ministry of Finance introduced a complex system of benefits for oilmen. The scheme was soon logically nicknamed the "patchwork quilt". Instead of an incentive to develop tight reserves, it played out a fight among companies for more and more preferences. As a result, almost every field actually began to be calculated according to individual tax. Due to the complexities of fiscal administration, many nuances have ceased to be taken into account. In strategic terms, moving along this taxation model is detrimental to the oil industry, therefore the introduction of AIT is reasonable and justified, says Alexander Pasechnik, head of the analytical department of the Energy Security Fund.
“As you know, companies sometimes received concessions for certain fields for a certain period - the severance tax rates are lower, or zero, everything depended on specific decisions and specific companies. If we leave the NDPI, we will see even more private stories, private requests. The system of accepting targeted benefits will be at the forefront, that is, we will see a flurry of such requests. To avoid these administrative details, we are moving towards the transition to AIT. This is already a system solution, albeit a pilot one for now, but it will replace targeted fiscal requests from oil and gas companies,” the expert says.
Something with something
Over the past two years, the parameters of the new tax have been changed and recalculated several times. As a result, the AIT in the proposed format is something between income tax and severance tax. It is not a tax on financial results in the classical sense, as it retains many elements of the rental system of taxation. The MET rate will not disappear, but will be reduced. And AIT will begin to be collected according to the following scheme: revenue minus actual and estimated expenses, multiplied by a rate of 50%.
In pilot mode, AIT will affect four categories of subsoil plots. These include: newly developed fields in certain regions of Eastern Siberia and the Far East; plots enjoying privileges for export customs duty; depleted at 20-80% of deposits in traditional mining regions; newly developed subsoil areas with negligible reserves also in traditional mining regions.
Entry into the VAT system is voluntary. At the moment, 35 license areas have applied for participation in the pilot. It is known that they are being developed by Rosneft, LUKOIL, Gazprom Neft and Surgutneftegaz.
Shoulder from the state
An obvious plus in the transition to AIT for oil companies is that expenses for capital investments can be accepted by the state in full at the time of their occurrence. In addition, tax efficiency for greenfields will increase: the actual spending limit will not be applied for 7 years.
« The tax will be calculated taking into account the economics of field development for the entire investment period. At the same time, the level of tax exemptions will depend on the profitability of each subsoil area separately, which allows the development of low-profitable hydrocarbon deposits, including those containing hard-to-recover reserves. Until the project pays off, the tax burden for oil companies will be significantly lower than under the current taxation system, which makes it possible to increase the profitability of projects and achieve payback in more than short time, reduce the volume and terms of raising borrowed funds necessary for the implementation of the project, thereby increasing the production of hydrocarbons in a particular subsoil area, ”explains Economic Advisor to the AssoNeft Association of Independent Oil and Gas Producing Organizations, Dr. economic sciences Margarita Kozenyasheva.
By the way, the expert shares the calculations of the Ministry of Energy on the expected fees from the AIT. Until 2035, the income should be about 1 trillion rubles, that is, on average, this is about 50-60 billion rubles annually for 18 years. However, according to Kozenyasheva, adjustments in these forecasts are not ruled out, since no one can accurately predict how prices for oil, the dollar, and other major currencies will behave in the future.
Concerns and risks
Companies that have MET and export duty benefits are afraid of losing them, so they do not particularly welcome the transition to new tax. While it is really more profitable for them to stay in old system tax coordinates, sure Margarita Kozenyasheva. « Tax authorities fear that oil companies will unreasonably overestimate their costs, underestimating the taxable base. But these fears will quickly dissipate once the system is up and running. Today, with the level of accounting control that exists, it is difficult to greatly inflate costs. During the implementation of the project for the transition to AIT, something will be corrected. But in general, this, of course, needs to be done, ”concluded Professor.
Many experts say that this strategic approach in the form of AIT is necessary for the development of the industry. However, the government is in no hurry to accept the new tax. Consideration of the bill has been delayed for years. This shows a clear lack of government confidence in business, as well as the unwillingness of the authorities to share commercial risks with the oil industry when developing complex projects. That is why the proposed AIT looks like a modification of the MET.
“Trends to optimize taxation have always existed. It is clear that the Ministry of Finance and supervisory services cannot blindly welcome the innovations of the oil industry. Although, in any case, the strategy for the development of the oil industry implies fiscal changes, including in favor of the oil industry. He is still looking for balance. Therefore, we see how slow this is all moving from the position of the oil industry, and therefore our fiscal services are in favor of conservatism of approaches. But I will note that the Ministry of Finance does not have a priority in strategy games, they actually need to work and show almost a monthly positive result, keep the deficit within the limits and keep it in an acceptable way annual budget”, - Alexander Pasechnik expressed his point of view.
World practice
In world practice, rental taxation systems have remained in countries where the problem of depleting resources and increasing the share of TRIZ is irrelevant: Saudi Arabia, Qatar, and the UAE. For example, in Canada, in order to stimulate the development of TRIZ, special taxation rules are established simultaneously with the rent system, in fact, they are similar to a tax on financial results. Other oil-producing countries, such as England and Norway, moved away from royalties in the early 2000s, which allowed them to significantly increase tax revenues to the budget by increasing the volume of production of raw materials. Analysts cite the experience of Norway separately. The oil industry is subject to income tax, to which is added a special tax at a rate of 78%. At the same rate, in case of losses, the state from the budget reimburses companies for the costs of exploration.
The AIT rate in Russia has been repeatedly attempted to be raised, but still stopped at 50. Roman Shumyatsky, State Counselor of the Russian Federation, Associate Professor of the Department of Public Finance at NSUEM, considers this percentage to be quite adequate.
“It is clear that all organizations and taxpayers, not only in our country, but throughout the world, do not want to pay taxes, because this is part of the property. Therefore, there must be a reasonable ratio. At one time, the American economist Laffer found out what the maximum tax burden can be on business, so that the state does not lose and business would be fine. So, he set the rate at 40-50% of tax exemptions. If more, the business will either die out or go into the shadows, ”the adviser is sure.
How the EIT will actually affect the oil industry will become clear only in 2020-22. Because at least one must pass fiscal year in the new tax system. Recall that it will be able to earn money only in 2019, provided that the bill is adopted by the State Duma.
The need for AIT has been discussed for almost two decades. This tax, intended to partially replace the mineral extraction tax (MET), is expected to stimulate the development of new deposits and accelerate the modernization of domestic oil refining. Additional revenues to the budget from AIT are estimated at a trillion rubles, but when introducing this mechanism, it is necessary to take into account all the nuances that prevented its implementation before.
Promised three years waiting
The bill on AIT for the oil industry was submitted to the State Duma at the end of November. Immediately after that, Prime Minister Dmitry Medvedev instructed the Ministry of Finance and the Ministry of Energy, together with the Federal Antimonopoly Service and the Federal Tax Service, to prepare draft legal acts necessary for the introduction of a new tax. The ministries were also instructed to work on the issue of simplifying the procedure for administering the capital expenditures of oil industry workers and considering the possibility of determining the total tax base for adjacent license areas developed as part of a single project in order to calculate AIT.
Draft by-laws should be prepared in the first quarter of next year. The adoption of the law will definitely take place next year, and it will work in 2019, as previously reported in the Ministry of Energy.
The VAT rate will be 50%, the MET will not be abolished, but the rate will be reduced.
The main idea of AIT is not to tax the volume of oil produced (the principle of the MET, levied on the proceeds of producing companies), but the income from its sale minus the export duty, MET, production and transportation costs.
AIT will be introduced in pilot mode at four groups of fields:
It is preliminary known that the AIT regime will appear on licensed areas that are being developed by Rosneft, LUKOIL, Gazprom Neft, and Surgutneftegaz.
On the part of the oil industry, the main initiator of the introduction of AIT was Rosneft. Its president Igor Sechin shortly after the sharp drop in oil prices and the devaluation of the ruble, he sent a letter about the need for more flexible taxation in the industry (a letter was sent to President Vladimir Putin in January 2015, and in May of the same year to the Russian government). These two factors led to a serious rise in the cost of a number of large projects, however, almost two and a half years passed before the submission of the government bill to the State Duma, and the First Deputy Minister of Energy of the Russian Federation Alexey Teksler immediately warned that the experiment with AIT would not be launched until 2019.
However, the head of the Ministry of Energy, Alexander Novak, said that budget revenues from the transition to AIT for pilot projects will amount to almost 1 trillion rubles. until 2035.
There is no reason to doubt this calculation - moreover, there is no other way to get an additional 100 million tons of oil without introducing AIT, says Economic Advisor to the AssoNeft Association of Independent Oil and Gas Producing Organizations, Doctor of Economics Margarita Kozenyasheva. However, she adds, it is necessary to understand that the estimated revenue from the sale of hydrocarbons is determined by a rather complicated formula, essential element which is the price of oil, calculated for a certain period, based on the level of prices for Urals oil on world markets in dollars per barrel. The formula also contains the average value for the calendar month of the US dollar against the ruble.
“Of course, the calculations made by the Ministry of Energy are based on various scenario conditions for changing these parameters, but it is rather difficult to look so far beyond the horizon and accurately predict how the price of oil will form on world markets. Today, there are already many factors indicating that dramatic changes may occur in the world oil pricing system itself. It is also unlikely that anyone can accurately predict how the dollar itself, as well as other major currencies linked to it, and above all the euro, will behave. Of course, there will be adjustments to this assessment, and there is nothing unnatural here,” Kozenyasheva predicts.
Why the introduction of a new taxation principle took so long, made it clear Dmitry Medvedev following a meeting with major players in the industry, which took place in Khanty-Mansiysk on November 21, immediately after the commissioning of the Erginsky cluster of Rosneft in Yugra.
“This topic is not easy, it is important to maintain a balance of interests between the oil business and budgetary tasks,” Medvedev said about the EIT at a government meeting. He added that AIT from the extraction of hydrocarbon raw materials should become a flexible mechanism that will allow launching a number of promising projects, since it is proposed to make tax burden significantly lower than now. This measure will reduce the volume and terms of loans, increase profitability and achieve self-sufficiency faster.
NDPI on "crutches"
The Value Added Tax was first proposed in 1998 in the face of falling world oil prices, which largely provoked the Russian August default.
“ITA was considered as an anti-crisis measure: they were offered to replace excises on oil, the rate for which was set in a fixed amount of money,” recalls CEO National law firm"Miter" Yuri Mirzoev.- The drafters of the bill justified the need for the introduction of AIT with fears that the oil industry would curtail production, and this could ultimately lead to a reduction in jobs at enterprises in the oil industry and related industries, unemployment, mass resettlement of people from the north and desolation of cities and towns. Optimistic forecasts were given regarding the execution of the consolidated budget”.
In 1999, oil prices began to rise and the grounds for the introduction of AIT disappeared. In August 2001, the MET became the main tax for the extractive industries, and its rates were set as a percentage. Although only two years later it became clear that the principle of taxation is far from ideal, and the issue of AIT was raised again.
“The authors of the project noted that the undifferentiated MET rate, which is the same for all fields, has a negative impact on oil production in hard-to-reach regions in a situation of high world oil prices,
Mirzoev notes. – It turned out that the share of MET in the cost of oil produced near export points is much lower than its share in the cost of oil produced in Eastern Siberia and processed in the depths of Russia with subsequent sale there. In fact, there was a redistribution of part of the income of enterprises producing oil in hard-to-reach regions in favor of producers with a favorable location. It was argued that the introduction of AIT would create conditions for a favorable investment climate, ensure the reactivation of idle wells, and the development of new fields. Developers are highly acclaimed tax implications new tax due to the growth of oil production by 10-30 million tons per year.
The second approach to the target was unsuccessful: when working out the details of the AIT mechanism, many questions arose; in 2009, the bill was withdrawn from consideration.
The flaws of the NDPI have not only not gone away, but have continued to get worse.
“The principle of operation of the MET was largely dictated by the realities of the early 2000s, when the state first of all solved the tasks of filling the budget, restoring order in the tax sphere and stopping the vicious practices of tax evasion under the guise of selling “borehole fluid” and other devices of the era of primitive accumulation capital in Russia, - reminds an independent expert in the fuel and energy sector Alexander Polygalov. - The introduction of the new Tax Code and the "YUKOS case" marked the boundary between the freemen of the "tax optimization" of the nineties and the new, uniform for all, tax norms. These norms were supposed to be easily administered, and the tax revenues themselves should be easily controlled.”
The rigid linkage of the mineral extraction tax to production volumes and world prices, without taking into account the peculiarities of a particular field, very quickly showed that this mechanism has an incurable “birth trauma”: production at many fields stopped with such tax regime commercially impractical.
“They tried to correct this injury with various “crutches”, without fundamentally changing the very essence of the mechanism,” Polygalov notes. - In the current version of the Tax Code, there are as many as five such "crutches". They reduce the MET depending on the depletion of reserves, on the value of initial reserves, so that fields with small reserves remain profitable, as well as on the viscosity of the oil produced, reservoir permeability and geographical factor. For oil produced in Yakutia, Irkutsk Region, Krasnoyarsk Territory, beyond the Arctic Circle and on the shelf of the Sea of Azov, the maximum possible discount according to the NDPI. The frightening and multiplying number of "crutches" makes it expedient to switch from income taxation to taxation of financial results. Changing the mechanism for withdrawing natural rent is a decision long overdue.”
In other words, the issue of differentiating the MET was relevant as long as the tax itself exists - the only question was which alternative would be chosen.
The emphasis on the physical volumes of production by introducing a number of parameters into the MET calculations complicated the systems too much and caused sharp objections from the Ministry of Finance, therefore, in the end, a more logical principle of differentiation by financial result triumphed, which in itself objectively reflects different levels of complexity of production.
“A step forward has been taken, and this is very important, and the one who walks will master the road. AIT is not the end of the development of the tax system, but the beginning of the transition to a new efficient taxation system. The parameters of the new tax have already been formed and have been repeatedly calculated before. Even companies in the independent oil and gas production sector have repeatedly tried them on themselves since 2016 and counted them many times. Today, it turns out that the AIT is a cross between the income tax and the mineral extraction tax,” Margarita Kozenyasheva believes.
According to the Assoneft expert, the introduction of AIT in 2018 or 2019 and the first period of its application to individual sites in practice will further adjust certain parameters for further application of the tax to other production regions, gradually spreading to the industry as a whole.
A task of increased complexity
If AIT is understood as the embodiment of the principle of a differentiated approach to oil companies, then the new mechanism is not something unique from the point of view of world practice. Of the closest neighbors of Russia, a rather complicated system of taxation of subsoil users is applied in Kazakhstan.
According to Mirzoev, it includes a number of payments: bonuses (signature and commercial discovery), payment for reimbursement of historical costs, MET (different for oil, minerals, common minerals, groundwater and therapeutic mud). The Tax Code of Kazakhstan provides for a tax on excess profits on the part of net income determined under each individual subsoil use contract for the tax period that exceeds 25% of the amount of deductions (expenses, losses). Excess profit tax rates in Kazakhstan could be as high as 60%, higher than the proposed AIT rate.
But taxing additional income is harder to administer than the MET, export duties and income tax, warns Mirzoyev. The introduction of a new regime in the Russian tax system requires a number of issues to be addressed.
“They, in particular, are related to determining the market level of prices for hydrocarbons sold and controlling the level of costs for field development. And the postponement of the payment of most taxes for the period after the cost recovery deprives the state of guaranteed budget revenues,”
- the expert notes.
According to Mirzoev, the introduction of AIT only for new fields looks expedient - all those where the development and production of oil will be started after the adoption of the law. Tax liabilities for the payment of AIT for each license area should be determined separately. In this case, the decrease in overall tax revenues from the oil sector will be insignificant - specific gravity new deposits in the total oil production in Russia is small. There are also possible loopholes to consider.
“With the existing system of accounting and tax accounting, insufficient transparency of the activities of most mining companies, many of which have hundreds of subsidiaries and affiliates, the methods of tax administration used are not able to provide the state with income from its mineral reserves. A system based on AIT may encourage the overestimation of the costs of extractive organizations and not contribute to cost savings and optimization of activities,” Mirzoev admits.
plus recycling
The upcoming experiment with AIT has another important aspect - linking the new mechanism with state support for oil refining. This is exactly what was said in a recent letter from Igor Sechin to the Deputy Prime Minister in charge of the fuel and energy complex Arkady Dvorkovich reported by RBC. Among the benefits in the document was the reduction of tariffs for the pumping of petroleum products, the freezing of Russian Railways tariffs for their transportation for a period of 20 years, the introduction of a refundable excise tax on oil supplied to the Rosneft refinery, and tax credits for excises.
This formulation of the question is aimed at finding a balance between the interests of the state (in the form of the trillion rubles mentioned above) and oil companies. It was Rosneft that felt the main burden of the tax maneuver in the oil and gas industry, during which the MET was sharply increased from about 15% to 33%, and at the same time duties on the export of oil and dark oil products were reduced, which sharply reduced the profitability of oil refining.
LUKOIL and Gazprom Neft, as well as Surgutneftegaz, were the relative beneficiaries of the tax maneuver, which had been actively investing in refineries before the maneuver, increasing the yield of light oil products and reducing the share of fuel oil, Polygalov notes.
For Rosneft, which is all last years invested mainly in oil production, in the development of the shelf, in the acquisition of TNK-BP and Bashneft, the maneuver turned out to be unprofitable.
Rosneft at the time of the beginning of the tax maneuver had much more objects for investment: seven large refineries before the purchase of TNK-BP and Bashneft, and twelve and a half large refineries, not counting small ones, after these two transactions. For comparison: LUKOIL has four large refineries, Gazprom Neft has one plus shares in two more, and Surgutneftegaz has one. Yes, the purchase of TNK-BP added the relatively developed Ryazan Oil Refinery and half of the Yaroslavl Oil Refinery to Rosneft's assets, while the purchase of Bashneft and its three refineries gave Rosneft control over perhaps the most developed oil refining cluster in Russia. However, the relatively backward oil refining of the same Samara group of refineries and the need to invest in both the newly acquired Saratov refinery and the already existing Siberian refineries or the Tuapse refinery still have not disappeared,” says Polygalov.
According to him, the introduction of AIT will increase rather than reduce the tax burden on oil companies. But at the same time, the domestic price of crude oil for Russian refineries may decrease if it is tied to the cost price, and not to the export parity mechanism.
It was the increase in the MET as part of the tax maneuver that led to an increase in the domestic price of oil for refiners, but if the MET rate is reduced with the introduction of the MET, the situation can be reversed.
“ITA is an experiment in production, it will still be worked out and finalized, but the reform of the taxation of oil refining is a separate and difficult topic, and so far there is no systematic approach here. At least today, these are unreasonable throwings that run counter to the course of the tax maneuver that was adopted in 2015,” adds Margarita Kozenyasheva.
However, in her opinion, all this has an objective basis: a cluster of unresolved problems in Russian oil refining is due to the “legacy” of the era of socialist construction (when the oil refining industry was focused on meeting domestic needs), multiplied by the problems generated by the transition to a market economy.
“World oil refining, or rather, its achieved best standards, is a level that is still inaccessible to us, and the world trade in petroleum products itself – its structure, forms, etc. – has gone far from us,” Kozenyasheva states. “At the same time, the shifts that the global oil industry is going through today are giving such impulses that any sane investor will have to wonder whether the large-scale and massive investments necessary for the Russian oil refining industry to take it to the world level will pay off. And here one tax reform is not enough at all. Here, everything needs to be connected not with taxes, but with a strategic choice, which is much more difficult.”
Plots:Russian President Vladimir Putin signed Federal Law No. 199-FZ, amending parts one and two of the Tax Code.
This law added a new chapter 25.4 “Tax on additional income from hydrocarbon production. The new tax has already received the short name of AIT.
The basis for the calculation of AIT will be the estimated revenue from operating and investment activity for the exploration and production of raw materials in the licensed area, reduced by the amount of actual costs, MET, export duty, transportation costs, and so on.
The tax period is a calendar year, the reporting period is the first quarter, six months and nine months of a calendar year. tax rate VAT will be 50%.
AIT will apply to four groups of fields:
The draft law on the introduction of a tax on added income for the oil industry (ATD) has only recently been adopted by the State Duma in the 3rd reading, and the Federal Tax Service has already begun to develop an appropriate tax return.
Recall that the new tax will not depend on natural indicators of oil, like the MET, but on the income of oil workers. Thus, they intend to stimulate the development of new deposits. The VAT rate will be 50%.
A notification from the Federal Tax Service on the start of developing a form and electronic format of a tax return for tax on additional income from the production of hydrocarbons was published on the website of the NLA projects.
The oil industry will conduct an experiment to introduce a tax on added income (VAT). The relevant law was adopted by the State Duma in the third reading, the Parliamentary Newspaper reported.
The experiment on the introduction of AIT will last 5 years and will cover 5 percent of deposits in Russia. The new tax will not depend on natural indicators of oil, like the severance tax, but on the income of oil workers. Thus, they intend to stimulate the development of new deposits. The new tax is attributed to federal taxes, his rate will be 50 percent.
The law also provides for a reduction in excise taxes on class 5 gasoline and diesel fuel by 3,700 and 2,600 rubles per ton. The reduction takes place retroactively, from June 1, 2018, and is due to the need to stop the growth in fuel prices.
The State Duma adopted in the second reading a bill on the introduction additional income tax(ITD) from the production of hydrocarbons and a reduction in excise taxes on fuel. The third reading is scheduled for July 5, writes RIA Novosti.
New mechanism involves a reduction in the tax burden at the stage of exploration, production, development of the field before it enters normal operation.
The tax will be levied not on the volume of oil, but on the cash flow. The basis for calculating the AIT will be the estimated proceeds from operating and investment activities for the exploration and production of raw materials in the licensed area, reduced by the amount of actual costs, MET, export duty, transportation costs, and so on.
The VAT rate will be 50%.
AIT will apply to four groups of fields.
The first group is new deposits in Eastern Siberia with a depletion of up to 5%.
The second group is deposits enjoying export duty privileges.
The third group is operating fields in Western Siberia with depletion from 10% to 80% (with a production quota of no more than 15 million tons).
The fourth group is the new deposits of Western Siberia with a depletion of less than 5% with total reserves of no more than 51 million tons per year.
In addition, for the mineral extraction tax from September 1 to December 31 of the current year, it is proposed to increase from 1.4022 to 2.055 the coefficient that characterizes the export profitability of a unit of standard fuel.
In the second reading, the bill was supplemented with norms on reducing excise taxes on gasoline by 3,000 rubles per ton from June 1, and on diesel fuel by 2,000 rubles from the current rates.
It was also proposed to abandon the previously proposed increase in excise taxes by 700 rubles from July 1. As a result, the excise tax on fifth-class gasoline will be reduced to 8,213 thousand rubles per tonne from 11,213 thousand rubles from June 1. It is expected to remain at this level until the end of the year.
At the same time, the excise tax on gasoline, which does not correspond to the fifth class, remains at the rate of 13.1 thousand per ton.
The excise tax on diesel fuel is reduced to 5.665 thousand rubles per ton from 7.665 thousand rubles.
The pilot project for the transition of oil fields from the tax on the extraction of useful executables (MET) to the tax on added income (ATD) will not be launched until 2019, First Deputy Energy Minister Alexei Teksler told reporters.
According to him, the departments no longer have time to submit a bill to the State Duma. Taxable period for AIT will be equal to the calendar year, which means changes in tax code must be paid before December 1st in order to have time to enter into force on January 1st of the next year.
Earlier, Aleksey Sazanov, head of the Tax and Customs Policy Department of the Ministry of Finance, announced a possible postponement to 2019 of the launch of a pilot project for the transition of oilmen to AIT.
The Ministry of Finance and the Ministry of Energy have been discussing a bill on the introduction of AIT for several years, RBC writes. On October 1, Deputy Prime Minister Arkady Dvorkovich said that the bill on AIT was fully prepared and had received the conclusion of the main legal department of the presidential administration. He noted that the department has technical comments that can be eliminated within a few days and the bill can be submitted to a government meeting. And Sazanov from the Ministry of Finance predicted that the government could make a decision before the end of October.
Now oil companies pay MET and export duties, these taxes are levied on revenue. The reform involves a partial replacement of the mineral extraction tax with a new tax on added income. The tax rate will be 50%, it will be levied on the income from the sale of oil minus the export duty, reduced severance tax, production and transportation costs. AIT was supposed to come into effect from 2018 as an experiment for pilot projects.
The ministries of finance and energy have conceptually agreed on a tax reform in the oil industry (switching from a fixed MET to a tax on added income, AIT), participants in the meeting from the two ministries told Vedomosti.
The reform will affect both new deposits in new regions (above 65th latitude, the first group) and old ones (the second group; production is not more than 10 million tons per year - a list will be prepared). The stumbling block was the question of whether all new deposits are subject to reform. The Ministry of Energy insisted on a voluntary transition to the new regime, the Ministry of Finance was against it. At a meeting on Tuesday, Energy Ministry officials finally came to terms with the mandatory reform, officials said, but only on terms already agreed with the Energy Ministry.
These are the conditions. The AIT rate is 50%, instead of duty and MET there will be only MET. With the new parameters, the MET burden for mature fields is significantly reduced, and for new ones with benefits, it slightly increases.
The oilmen, officials say, agreed for two reasons. Firstly, a big gain for old fields - in fact, a quasi-benefit, the budget loses up to 40 billion rubles. Secondly, it is advantageous to change tax exemptions for AIT at new deposits - there is a great chance that they, together with the duties themselves, will be canceled, even if there is no AIT.
Accelerating the tax maneuver is under active discussion, three federal officials say. Duties have been decreasing since 2015 (and the MET is growing in proportion), in 2017, according to the law, they will fall to 30%. The Ministry of Finance wants to nullify them - benefits will automatically disappear. The oilmen have nothing to lose, says a consultant participating in the discussions. In this context, AIT is a very attractive option, the official is sure.
The Ministry of Finance needs a maneuver: the tax base The severance tax is higher, and besides, duties distort pricing - according to the formula, the domestic price of oil is tied to them. Zeroing will reduce refinery margins - compensation is being discussed. But it is unlikely to happen before 2018, the official thinks. An increase in the severance tax is also being discussed - it may or may not coincide with the zeroing of duties.
The Ministry of Finance needs a maneuver: the MET tax base is larger, and besides, duties distort pricing - the domestic price of oil is pegged to them according to the formula. Zeroing will reduce refinery margins - compensation is being discussed. But it is unlikely to happen before 2018, the official thinks. An increase in the severance tax is also being discussed - it may or may not coincide with the zeroing of duties.
The representative of the Ministry of Finance has already officially told Vedomosti that to compensate for the missing 40 billion rubles. there will be an increase in the severance tax on fields that are not subject to tax reform. The increase is almost a settled issue, it can be announced in the fall, even if there is no AIT, one of the officials knows.
The oilmen are being dragged into a risky game with the Finance Ministry, which obviously has a stronger position: the situation with the budget is difficult, one of the participants in the discussions in the Finance Ministry states.
AIT is good for everyone, it will increase both production and - as a result - taxes; the main thing is that all these maneuvers do not covertly increase the burden on the industry, it is already prohibitively high, points out Sergey Vakhrameev from GL Asset Management.
The Ministry of Finance of the Russian Federation has prepared new proposals for the taxation of the oil industry, involving the introduction of a tax on added income (VAT) for old and new fields. Their implementation will lead to falling budget revenues.
The reform will apply to both new and some old fields, for the latter a list of pilot projects will be prepared. The total production at old fields should not exceed ten million tons, there are no restrictions for new ones, the Vedomosti newspaper reports, citing a presentation by the Ministry of Finance.
The Ministry proposes to collect from oilmen 50% of the proceeds from the sale of oil, minus the costs of production and transportation, but not more than 9,520 rubles. per ton. The severance tax at $50 per barrel at the old field will be $17.5, or 35% of the price. Holidays are provided for new fields: the first five years of commercial development, the MET will be $7 at $50 per barrel (14% of the price), then it will increase, and from the eighth year of development the regular rate will apply.
The Ministry of Finance of the Russian Federation prepared and sent to the ministries and oil companies a presentation with the parameters of the draft law on value added tax (ATD).
According to the presentation, the AIT rate will be 70%. The tax base will be determined by the estimated revenue from the extraction of raw materials minus the estimated transportation costs, export duty and mineral extraction tax, as well as actual operating expenses and capital investments.
At the same time, AIT begins to be levied only when all the costs of the company pay off plus it receives a fixed income on cash flow in the amount of 6%. The introduction of AIT provides for the preservation of the export duty on oil, income tax and severance tax. At the same time, the MET rate will be adjusted, the Vedomosti newspaper reports.
Let us remind you that earlier deputies of Yugra No. 862141-6 on the introduction of a special tax on profits for oil workers, which should replace the severance tax. The rate of this tax will be 60%.
The Ministry of Finance held a meeting last week with oil companies to develop a draft law on value added tax (ATD).
At the same time, the new draft law will become an alternative to the draft law on the tax on financial result (NFR) for the oil industry, already submitted to the State Duma.
Both taxes provide for the replacement of the current MET. Both taxes take into account the costs of oil exploration and production of oil. At the same time, the procedure for accounting for expenses for the NFR and AIT is different.
In the NFR tax base, the capital expenditures of oil companies are written off at an accelerated rate (an additional 40% over four years). The tax base for AIT takes into account operating costs and all capital investments. But at the same time, the tax rate is floating and depends on the P-factor, that is, the ratio of accumulated income to accumulated expenses. Thus, with an increase in profitability, the AIT rate will increase.
In addition, it is assumed that the NFR will replace the severance tax only at existing fields, and the severance tax is intended for new ones, the Vedomosti newspaper reports.
Rosneft President Igor Sechin intends to propose the introduction of a value added tax (VAT) for new oil fields.
Russian Energy Minister Alexander Novak announced today following a meeting with the prime minister that the Russian government intends to introduce a tax on financial results for the projects of the three companies.
According to the minister, 12 fields of three oil and gas companies - Gazpromneft, LUKOIL and Surgutneftegaz - have been proposed as pilot projects.
The head of the Ministry of Energy noted: “Today, the Prime Minister decided on the need to make changes and the government decides to prepare such a bill, which will reflect the need to introduce pilot projects based on a tax on financial results.”
“We discussed a lot today the key forks: questions that have not yet been answered, which require additional study. On a number of them, decisions were made by the Prime Minister today - one of the forks concerns the introduction of a tax on financial results as a pilot project," Alexander Novak said, TASS reports.
Deputy Finance Minister Sergei Shatalov said at parliamentary hearings on the topic "Taxation of the oil industry" that the transition from the mineral extraction tax to a tax on financial results will require the creation of a system for accounting for oil produced, accounting for income and expenses, and distributing income within vertically integrated companies.
The representative of the Ministry of Finance explained that all these issues are solvable, but require a run-in. At the same time, Sergei Shatalov noted that the tax on financial results is not universal and cannot be automatically replicated for all fields.
The Deputy Minister explained that this tax will not bring positive results for those fields that are already enjoying tax holidays, export duty benefits, special regimes for offshore and hard-to-recover reserves.
Sergey Shatalov also noted that the tax on financial results should be credited to the federal and regional budgets, the press service of the State Duma of the Russian Federation reports.
Sergei Shatalov, Deputy Minister of Finance of the Russian Federation, told reporters that when the tax on financial results is applied to all fields, income federal budget can be reduced by hundreds of billions of rubles.
“These are rough estimates, they should not be particularly trusted, but we are talking about hundreds of billions of rubles,” Sergey Shatalov said, Interfax reports.
Recall that the Government of the Russian Federation has been considering in a pilot mode since 2016.
Currently, oil companies pay mineral extraction tax (MET), income tax and other types of taxes. At the same time, a new tax on financial results, which will replace the current system of taxation of oil workers, according to a number of experts, will allow taking into account the costs of field development.
Deputy Prime Minister of the Russian Federation Arkady Dvorkovich said at the Krasnoyarsk Economic Forum that the government does not plan to adjust the tax regime for oil companies.
“We are considering only individual applications for the provision of benefits, and we will not change the general regime,” the deputy chairman of the government explained.
.Recall that at present oil companies pay mineral extraction tax (MET), income tax and other types of taxes. At the same time, a new tax on financial results, which will replace the current system of taxation of oil workers, according to a number of experts, will allow taking into account the costs of field development.
Director of the Tax and Customs Tariff Policy Department of the Ministry of Finance of the Russian Federation Ilya Trunin said today at the Gaidar Forum - 2015 that the Ministry of Finance considers the principle of pilot projects to switch to a tax based on financial results unacceptable.
The representative of the Ministry of Finance noted: “The law introduced by the KhMAO categorically does not suit us, we see the principle of pilot projects as categorically unacceptable. The basis on the preferential taxation system is categorically inconsistent with our principles. If we want to make tax reforms in oil, we need to make it universal.”
In addition, Ilya Trunin noted that due to the low price of oil, budget revenues of the Russian Federation from hydrocarbon production are declining, reports
2018 will bring changes in the field of legislation Russian Federation. First of all, they touch tax sphere. To be more specific, the following will be reformed:
The draft law providing for innovations can be adopted before the end of this year. The amendments themselves will come into force only next year, 2018.
Changes in the procedure for accruing AIT are aimed at removing a number of preferential measures for individual deposits. Accordingly, the rates from which the tax is calculated will be brought to the base values.
The tax on added income in the current version of the law still significantly limits the Ministry of Finance of the Russian Federation, but new order its formation may give the ministry the right to eliminate the duty on export Russian oil. Experts believe that such innovations can replenish the federal budget in the amount of 600 billion rubles.
As a result of the meeting chaired by Arkady Dvorkovich, the Ministry of Finance received an order to prepare, by October 1, 2017, a draft law providing for the transition to a new procedure for calculating AIT. Then, already in 2018, the state will be able to put it into effect.
The protocol of the meeting allows us to say that its participants were able to resolve a number of rather complicated contradictions affecting the national interests and the interests of the oil workers themselves.
So, for example, a long dispute between the Ministry of Finance and oil-producing corporations regarding the procedure for levying tax on cash flow each specific field, and not from the total volume of pumped and exported oil. With the adoption of a package of changes to the Tax Code, this problem may lose its relevance.
The reform project is local in nature and does not involve global changes
The current rates of duty on the extraction of minerals (MET) will be reduced, but the tax itself will remain.
The main purpose of the introduction of AIT is only to replace the benefits in the field of oil exports and rates for the extraction of minerals for the so-called "greenfields" (new oil production sites)
In addition, it is planned to extend, as an experiment, the reform to "brownfields", that is, old mining sites with a total production of 15 million tons or less.
In fact, the state is offering the oil industry a kind of exchange: we are canceling the benefits, but introducing a new procedure for calculating the value added tax with a number of concessions. A similar step in existing economic conditions quite justified for the state.
By canceling the export duty on oil and replacing it with the AIT along with the MET, the Ministry of Finance finds an additional source of budget financing.
One of important points the dispute between the oilmen and the authorities was also an opportunity in voluntary go to work under the new rules. The Ministry of Finance wanted to extend the reform to all fields where there is now a preferential taxation procedure, except for those to whom export privileges were already applied before 2016.
Deputy Prime Minister Dvorkovich spoke in defense of the oil workers, so the draft law provides for the opportunity for companies throughout 2018 to voluntarily and independently resolve this issue.
At the same time, it will be possible to issue a preferential procedure for oil production at the current duties until the end of 2017. And, according to Kommersant, about fifteen applications have already been submitted to the relevant authorities.
However, some experts believe that with the adoption of the new tax, oil workers will not really gain much
After all, if the state cancels the duty, then companies in this industry willy-nilly switch to the amended AIT, since the use of the preferential procedure for doing business will be meaningless.
Along with the above issues, the parties also discussed technical issues.
For example, a decision was made to threshold value development of brownfields, starting from which, these areas are subject to reform: these are fields developed from 20 to 80% (although the position of the Ministry of Finance was based on the 25% lower barrier).
Dvorkovich also ordered the relevant ministry to attend to the development of a special method for calculating AIT for the youngest fields in Western Siberia, which are developed by no more than 5%. However, according to Kommersant, this issue is being lobbied by LUKOIL, which is trying to obtain benefits from AIT at the Imilorskoye and them.
Shpilman, who today work without any preferences. Experts expect that the solution of the issue will not bring the desired result to the oil company. After all, the adoption of such a law would directly contradict the goals of the reform, namely, not to allow selective indulgence in relation to individual corporations.
And yet, a number of controversial and unresolved issues remain between government officials and leaders of the oil industry:
In conclusion, we can say:
The draft law on value added tax (ATD) will soon be submitted by the Russian government to the State Duma. Energy Minister Alexander Novak announced this on the sidelines of the Eastern Economic Forum.
According to him, at a meeting with Deputy Prime Minister Arkady Dvorkovich, the project was approved. Value Added Tax, unlike the mineral extraction tax, is levied on income from the sale of raw materials minus extraction and transportation costs.
The draft law submitted to the government provides for a voluntary transition to AIT for developers of new fields and oil producers at wells with a production of no more than 15 million tons.
Now the government is considering two bills that, in fact, give benefits to low-margin oil fields to stimulate their production.
As reported, at the Gaidar Forum, Russian Finance Minister Anton Siluanov said that the ministry is in favor of urgently replacing the mineral extraction tax (MET) with an added income tax (ATD).
p.s.
Value added tax: what does it mean for the budget
In early May, the media reported that the head of Rosneft, Igor Sechin, proposed introducing a tax on added income for new oil fields developed in Russia. However, the Ministry of Finance opposed the reform.
"Budget" prepared a material about what is AIT and how this form of taxation of the extractive industry differs from the two already used in Russia - customs duties and a tax on the extraction of minerals.
ROSNEFT'S OFFERS AND THE RESPONSE OF THE MINISTRY OF FINANCE
According to media reports, Rosneft has already prepared a draft law on AIT. At the same time, I. Sechin himself described the reform in a letter to Deputy Prime Minister Arkady Dvorkovich.
In turn, the Ministry of Finance called the experiment with AIT untimely. On May 8, Ilya Trunin, head of the Department of Tax and Customs Tariff Policy, told the TASS news agency that the issue of urgent introduction of AIT has not been worked out.
In general, the AIT has the same drawbacks as the income tax (NFR), an experiment on the introduction of which is currently being worked out by the Ministry of Energy, he added.
“Now is not the time to experiment in an industry that generally provides up to 50% of income budget system", - the agency quotes him as saying. I. Trunin emphasized that in recent years the current system of taxation of the oil industry has been replenished with a huge number of preferential regimes and a tax maneuver was carried out, which led to a reduction in the burden on oil production.
I. Trunin explained that the EIT suits oil companies, as it will give them additional benefits, will allow them to stimulate investments and increase capital investments. But the assessment of AIT in terms of its impact on the economy as a whole is ambiguous.
WHAT IS ADDED INCOME TAX
AIT is charged on the difference between the amount of income from the sale of resources and the cost of their extraction. Thus, the tax is imposed not on the entire revenue of the company or the amount of resources extracted by it, but on the financial result. The transition to AIT has been discussed for several years.
Previously, it has been repeatedly reported that new system It will help to more fairly distribute the tax burden among companies, but will not reduce federal budget revenues. AIT allows lower rates for all new deposits.
This effect is obtained due to the fact that at the initial stage, development costs are high, and oil sales from wells are low. However, after the deposits reach full capacity, the AIT allows you to collect more taxes and compensate for budget losses at the initial stage.
The same applies to deposits at the final stage of development: their costs begin to rise, and production volumes fall, therefore, the tax base decreases.
What's wrong with NDD? It is difficult to administer. In contrast to this tax, export regulations in force in Russia customs duties oil and mineral extraction taxes are very easy to levy.
HOW THE OIL INDUSTRY IS TAXED NOW
MET is levied at the stage of mining. For a large number natural resources mined in Russia are subject to ad valorem tax rates.
In other words, mining companies give back a certain percentage of their value. Tax on oil and gas is levied at specific rates.
This means that companies pay a certain amount for each barrel of oil or cubic meter of gas, and not part of the income from the extracted resources. The second tool - customs duties - is used if the resources extracted in Russia are exported.
Duties are levied on the same principle as the MET - for oil, this is a certain amount per ton of resource.
WHAT IS HAPPENING WITH INDUSTRY FEE NOW
Rosneft's proposal came against the background of large-scale changes in customs duties and mineral extraction tax rates that took place on January 1.
Under the new rule, duties will be sharply reduced, while the MET, on the contrary, will increase.
The changes suggest that over three years, export customs duties on oil will be reduced by 1.7 times, and on oil products - by 1.7-5 times. At the same time, the MET rate for oil will increase by 1.7 times, and for gas condensate - by 6.5 times.
