Budgetary minerals: how oil and gas increased their share in Russian taxes

Including tax revenues from oil and gas production increased by 50%, to 4.6 trillion rubles. Last year, the authorities continued their budgetary maneuver, expressed in the gradual abolition of export duties in exchange for an increase in mineral extraction tax rates. At the same time, the dynamics of crude oil exports and production have not changed much compared to 2021. According to the Ministry of Energy, exports amounted to 256.9 million tons (+6% by 2021), and production - 546.7 million tons (-0.2%).

The main contribution to the dynamics of oil and gas revenues was made by the rise in prices for Urals oil, says Sergei Belev, head of the budget policy laboratory at the Gaidar Institute. “The dollar exchange rate did not react to changes in oil prices due to the Ministry of Finance’s policy aimed at increasing foreign exchange reserves. As a result, the actual ruble rate on mineral extraction tax averaged more than 7.8 thousand rubles in 2021. per ton of oil, while in 2021 it averaged just over 3 thousand rubles,” the expert notes.

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The extractive sector was the driver not only of tax revenues, but also of business activity in industry in general, Kulikov believes. “Metallurgists also felt good due to rising world prices, which in turn was associated with real production restrictions in China. For energy companies, the increase in tax payments is also associated with the completion of the program of power supply agreements (CSA) and the corresponding increase in profits,” he notes.

Photo: Egor Aleev / TASS

Mineral extraction tax: general information

Mined minerals can be divided into the following groups:

• flammable substances (coal, peat, shale);
• hydrocarbon products, which include oil and produced gas with methane;
• ore;
• various types of non-metallic raw materials extracted by mining and mining chemical enterprises;
• Mineral extraction tax is also charged on rare metals;
• colored stones;
• quartz raw materials;
• precious and semi-precious metals, stones;
• salt;
• water for medicinal purposes and industrial, extracted from underground or natural, thermal springs.

The full list is specified in Art. 337 Tax Code of the Russian Federation. The object of taxation of mineral extraction tax is the volume of mineral resources extracted on the territory of the Russian Federation and abroad (Article 336 of the Tax Code of the Russian Federation). Raw materials obtained from sources that are not registered with the state and are not on balance sheet for government agencies are not subject to taxation. Raw materials from this category of subsoil can be extracted by an entrepreneur to meet his own needs.

Real estate is lagging behind

Sectors related to public administration (+6.3%) showed weak dynamics relative to the average growth, which is likely due to the consolidation of budgets, Kulikov believes. The sectors of investment demand are in the same situation - construction (+3%) and real estate transactions, which, according to the expert, are more volatile and may be depressed after the recession.

Real estate transactions brought budgets RUB 503 billion. taxes are nominally three times less than for the same line in 2016 (RUB 1.6 trillion). But, most likely, these data cannot be directly compared: the fact is that since 2021, the Federal Tax Service has switched to new classifiers of types of economic activity OKVED-2, as a result of which a regrouping has occurred between industries.

For example, if in the 2021 statistics the basic industry “Transport and Communications” was highlighted, now we are talking about two basic industries - “Transportation and Storage” and “Information and Communications”. Similarly, the Generation and Distribution of Electricity, Gas and Water sector has been divided into two - one related to electricity, steam and gas, and the second related to water supply and waste management.

Mineral extraction tax in 2021: rates and innovations

To calculate the amount of tax liabilities, two rate scales are used:

1. Interest grid (ad valorem rates), which is used when calculating tax based on the tax base expressed in the cost of raw materials.
2. Ruble rates (specific), which are assigned for each ton of raw materials, taken into account by production volume.

In paragraph 1 of Art. 342 of the Tax Code of the Russian Federation provides a list of minerals with a zero tax rate provided for them. Liabilities are calculated for each tax period - it is equal to a calendar month.

Law No. 286-FZ of September 30, 2021 amended the Tax Code of the Russian Federation. A tax deduction is provided for the tax on the production of combustible natural gas. To receive a deduction, several requirements must be met:

• the subsoil is located in the Black Sea (partially or completely);
• the deposit is not new;
• the enterprise carrying out production is registered in the Republic of Crimea or in the city of Sevastopol until 2021;
• in the reporting tax period, expenses were made on fixed assets (purchase, delivery, commissioning), which were included in the investment development program of the gas transportation system of the Republic of Kazakhstan and Sevastopol.

The amount of the deduction corresponds to the amount of costs actually incurred on fixed assets, but cannot be higher than the maximum value of the benefit (0.9 x tax amount).

Legislative measures

Another factor that influenced the growth of revenues in 2017 was the temporary ban for taxpayers to fully take into account the losses of previous years when calculating the tax base: from 2016 to 2021, an amendment was in force in the Tax Code, according to which the income tax base is not can be reduced by more than 50% due to accumulated losses.

“Taking into account the fact that past years were marked by problems with the financial results of enterprises, and in recent years the share of unprofitable organizations has been decreasing (from a peak of 33% in 2014 to 28%, according to preliminary data from Rosstat for the first 11 months of 2021), this measure made it possible to prevent a decrease in the tax base in 2017,” says Belev. As RBC wrote earlier, in 2021 the regions managed to collect 248 billion rubles from companies. more in terms of income tax, including due to a temporary limitation on the carry forward of losses from previous years.

It is logical that the main increase in income tax revenues occurred in industries with a high level of competition, where organizations have to exist with lower profitability, he says.

Income tax in the manufacturing sector brought in 605 billion rubles. into the consolidated budget - 15% more than a year earlier. And from the wholesale and retail trade industry, including car repairs, it was possible to collect 620.5 billion rubles in income tax. — an increase of 29%.

The dynamics of revenues from the manufacturing industry are largely due to the restriction on the deduction of losses from the tax base, says Kulikov. In addition, the metallurgy industry “gained 90% of its growth due to good market conditions, and the above-average growth in fees from the production of food and tobacco products was partly due to the current counter-sanctions,” the expert believes.

In general, tax revenues from wholesale and retail trade increased by 15.5%, to 1.84 trillion rubles, from the financial and insurance sector - by 11.7%, to 927 billion rubles. The increase in revenues from trade was largely due to the wholesale component, Kulikov believes. Retail, he says, was still depressed: “Despite the revival of lending, the underlying dynamics of household income were still clearly depressed.”

Mineral extraction tax 2018: determination of the tax base

The taxable amount is withdrawn by the taxpayer independently. Calculations are made separately for each type of raw material. The cost of raw materials is calculated:

• at selling prices currently on the market;
• based on price indicators that do not take into account the amounts of subsidies received to cover the gap between the market and calculated price tags;
• according to calculated standards, if no sales were made for a specific type of raw material during the tax period.

The tax base for mineral extraction tax is determined as the number of minerals that were extracted by the enterprise, or the cost of raw materials received by mining organizations. It is necessary to focus on quantitative indicators when developing oil, gas, and coal fields; the norm applies to multicomponent ores in the Krasnoyarsk Territory. Cost values ​​are used in calculations for the extraction of other types of minerals and hydrocarbons in offshore areas of fields (oil, gas).

Determination of the tax base

The procedure for calculating the amount of duty on extracted minerals begins with the calculation of the tax base (TB). The latter, in turn, is determined by the quantity and cost of extracted resources.

The tax base, or the number of minerals, is measured only in physical terms, and is calculated by two methods - direct and indirect. After choosing a method for determining the amount of extracted raw materials, it is fixed in the accounting policy. Taking into account these data, a declaration is filled out. Each option is used under individual circumstances.

Direct calculation formula

Losses count like this

The second component of NB is cost. To calculate the cost of extracted raw materials, the payer uses three methods:

1. Based on the resulting estimated cost of the resource, excluding subsidiary investments.
2. Taking into account the value relevant during the current tax period.
3. Using the established estimated price of the extracted resource.

Method 1:

or

Method 2:

Method 3:

According to the logic of patching holes

The first is the predictability of the tax regime. Yes, the tax regime for the industry is constantly being tightened, but this has never happened the way it is happening now. Let's take the tax maneuver. From the point of view of oil companies, it involves a gradual deterioration of tax conditions, but at the same time there is a clear plan for step-by-step changes until 2024. Additional withdrawals were agreed and planned, which made it possible to build an investment policy that is very important for an industry with a long return on capital investments.

The main measure within the maneuver was the replacement of the export duty with an increasing mineral extraction tax. AIT was considered as an experimental tax regime. It was assumed that in relation to pilot projects, the experiment with NDD would last for at least 5 years without changes, after which a decision would be made on its future fate and possible wider application. The NDD was adopted after detailed calculations and almost ten years of discussions. Its parameters were the result of a complex compromise.

The companies have already made investments based on approved long-term parameters, intensifying the development of a number of assets in Eastern Siberia, the Yamal-Nenets Autonomous Okrug and the Nenets Autonomous Okrug, the profitability of which under the normal tax regime was below the minimum acceptable level for investors. So what now? The conditions for applying AIT at the request of the Ministry of Finance may change radically. What will we get: everyone will be artificially “driven” into the new personal income tax instead of benefits under the mineral extraction tax? But just recently, representatives of the Ministry of Finance themselves called the AIT a mistake. Thus, instead of tax predictability, we see “Wikipedization” - tax rules are rewritten, like a Wikipedia article.

The second value is a focus on long-term development goals. We are often told about the need to look into the future and engage in long-term planning. But there is another logic: let’s plug the current holes, even if we deprive ourselves of prospects. Changing the AIT parameters and other innovations will obviously lead to a revision of production programs in the oil industry. Expected decrease in oil production of projects in the AIT for 2021-2030. could amount to 270 million tons, the reduction in investment - 2.3 trillion rubles. We constantly hear that the share of the oil industry in budget revenues is declining, but the budget is still unthinkable without it. And a failure in oil production can lead to significant, according to some estimates, up to 2 trillion rubles, budget losses.

Konstantin Simonov: The package of new tax initiatives looks quite controversial. Photo: from personal archive

Oil workers are often portrayed as “fat cats” who take all the profits for themselves in the form of dividends. Of course, no one is going to present them as beggars. But here’s just one example: the volume of LUKOIL’s investments over the past 10 years has exceeded the amount of dividends 5 times.

Where does the Ministry of Finance come from? Because production cannot collapse, what taxes should you not impose? But there was the experience of the 90s, when production collapsed by more than 200 million tons. I think many people remember what happened to income then. Another popular thesis is: why think about the future of oil production if no one will need oil soon? Why then did the United States increase production by 2.2 times over the past 10 years, surpassing us in this indicator? They are trying to squeeze us out of international markets, where competition is growing, and we respond to this by creating new difficulties for our own industry? I wonder who will fill the holes and with what if they arise.

The third value is the “unsinkability” of the National Welfare Fund (NWF) as a fund for stabilizing the budget system during a period of low oil prices. In general, the increase in taxes on the oil industry was largely due to the need to fill the National Welfare Fund. Funds from it should be spent to cover possible budget deficits during a period of falling oil prices. For some reason this is not happening, although it was the oil workers who largely filled the National Welfare Fund. It turns out that during a period of low prices it is protected as a sacred cow, thereby partially depriving the economy of development prospects.

The new tax regime could lead to the closure of a number of projects and a drop in oil production

The fourth is the openness of government officials. The initiatives of the Ministry of Finance, despite their obvious significance, for some reason did not undergo the procedure of public discussion as part of the regulatory impact assessment. Not even all relevant ministries were informed before the bill was introduced to the State Duma, not to mention the expert community. The viscous oil initiatives were developed as if in heightened secrecy, although traditionally all major tax changes had undergone at least some discussion beforehand.

The fifth value is stimulating employment and fighting poverty. Few people think about it, but the oil industry is a major employer. The latest proposals can change the fate of many projects. The prospects for Gazprom Neft's East Messoyakhskoye and Novoportovskoye fields are becoming hazy. At Tatneft, more than 10% of production comes from viscous oil; the Ashalchinskoye field and other projects may be closed. More than 10 thousand people work at LUKOIL’s Yaregskoye field alone, which also falls into the unprofitable zone. But there is also oil refining, petrochemicals, energy and hundreds of contracting organizations in other industries. At the same time, for viscous oil, a transition to the APT regime has not even been proposed!

The oil industry is under strain due to declining global demand, falling prices and sanctions. Now we can add to this some proposed innovations that seemed to be written in a hurry. Is it really true that some officials’ penchant for experimentation is becoming a “corporate style”?