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New Tax Treatment of Oil and Gas Industry
National Energy Security Fund, April 2009, Pages: 68
The decline in oil prices has led Russian oil companies to say that production and export have become unprofitable.
The industry has formulated a clear request to the executive: taxes need to be lowered. And, Vladimir Putin has proved that the oil and gas industry remains his priority.
A plan has been developed to seriously diminish the fiscal burden on the sector. Yet, there remain many questions.
Who will benefit most from the new tax treatment? Will this lead to a rise in investment or primarily a rise in dividend payments to shareholders? What will be the economic and political implications of the innovations?
The answer to these and other questions you will find in the new report.
The report offers an in-depth discussion of the following subjects:
Overview of the current tax system implemented during Vladimir Putin’s first term as president
- The reasons for its appearance, the key lobbyists for it to be implemented
- Its pros and cons for the industry, the federal budget, and individual corporations
Fight for tax reductions: the key players and the disposition of the combat
- The industry versus the Finance Ministry
- Putin as an arbiter
- The role of President Medvedev in tax disputes
- The struggle between elite clans for tax treatment of the oil and gas sector
- Pull-down prospects for the “Kudrin scissors” (the mechanism whereby the Finance Ministry expropriates most of oil companies’ profits)
New Putin package. Analysis of the most recent tax cut initiatives
- Reform of the export duty levying system
- Differentiation of mineral resources extraction tax
- Tax benefits for eastern and offshore projects
- Attempts to stimulate the beginning of the development of greenfield sites and the reanimation of brownfield ones
- Amortisation benefits for oil and gas equipment
- Key beneficiaries and potential losers
The problem of taxation in the market for petroleum products. Struggle for raising gas extraction tax
Forecast of developments
Chapter 1. Oil & Gas Sector Taxation System Developed under Vladimir Putin as President
Chapter 2. Key Groups of Interests in Fight for Change of Oil & Gas Sector Tax Treatment
Chapter 3. Mineral Extraction Tax: new approaches
Chapter 4. Export Duties: Putin’s Main Present to Industry
Chapter 5. Changes in Tax Treatment of Petroleum Products
Conclusion. No Full Stop. Forecast of Developments