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Tax news in the Russian energy industry

Russia
2 Feb 2013
The most discussed tax new in Russian energy industry are: tax and duties being decreased for oil fields on the continental shelf; and unconventional oil fields.

The Russian Government has issued two important resolutions with regard to taxation of the energy industry.In resolution No. 443-r, dated 12 April 2012, the Russian Government proposes, among other things: (i) to exempt oil producers export duty; (ii) to stipulate that tax rates may not be changed for a specified period with regard to different kinds of oil fields; (iii) to increase to 70 years the period for which tax losses may be carried forward for every oil field and to allow high depreciation coefficients to be used; (iv) to make reserves for CIT purposes for liquidating oil fields on the continental shelf liquidation; and (v) for separate accounts to be kept for income and costs with regard to every shelf project.

In its resolution No. 700-r dated 3 May 2012 Russian Government proposes, among other things:  (i) to establish reduced rates of mineral extraction tax for unconventional oil fields having regard to the complexity of extraction; (ii) to stipulate that tax rates may not be changed for a specified period having regard to the complexity of extraction, and require separate accounts to be kept of income and costs with regard to unconventional oil fields which are taxed by the reduced tax rate; (iv) to make reserves for CIT purposes for unconventional oil field outworking; (v) to apply low (or zero) tax and export duty rates having regard to the level of complexity of extraction.

The provisions of these rulings have not yet come into legal force, but they are anticipated to take effect and to influence taxation of the energy industry. 

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