Complete substitution of current taxing system in oil sector is untimely

11 february 2015 | Kommersant FM

A rejection of the mineral production tax will help to avoid a disinvestment in the oil sector. That was Viktor Vekselberg, the Chairman of the Board of Directors of Renova Group, who proposed to reject the tax. However this initiative realization will harm the “black gold” extraction sector, experts consider.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

“Such proposals are widely discussed. There are the global tax on financial results and mineral production tax case reports, but in many jurisdictions these two systems are integrated”, commented on the situation to “Kommersant FM” the Head of the Department for Strategic Studies in Energy of the Analytical Center Alexander Kurdin. Each of these systems has its own advantages - the mineral production tax is more stable and the tax on financial results is more appropriate for extraction stimulation, according to the expert. “However it may cause some risks for the state budget. Hence a certain switch to the tax on financial results is viable, but complete substitution of current system is untimely”, said Mr. Kurdin.