Russia: Oil duties and taxes go up


On 28 April, the Upper Chamber of the Russian Parliament approved a bill drastically raising the tax burden for oil companies. The new law will alter the procedures for calculating export duties set out by the Federal Law "On Customs Duties," as well as the basic rate of oil extraction tax established by the Tax Code. If signed into law by the President, amendments to the Customs Duties Law come into force within one month of promulgation, and those concerning oil extraction tax shall become effective as of 1 January 2005.

The formula for export oil duty is primarily based on world prices for crude oil "URAL." The new law changes the existing threshold scale for calculation of oil duties. Under the new law, in the event that the average URAL price reaches more than $146/ton but less than $182.5/ton, the export duty shall be $12.78/ton, plus 45% on the excess over $146. Previously, export duties for the latter comprised 35% on the excess beyond $109.5/ton. Further, the existing rates for exported oil where URAL prices exceed $182.5/ton have been increased to $29.2/ton and 65% on the excess over $182.5, as opposed to the previous rates at $25.53/ton and 40% accordingly.

The domestic oil extraction tax rate is established at RUR400/ton, which equates to a RUR53 increase on the old rate of RUR 347/ton.

For further information please contact David Griston at: [email protected]