Russia considers mineral extraction tax rise

Russia’s President Vladimir Putin. Photo by kremlin.ru.

Russia is considering tripling the mineral extraction tax on metals and fertiliser producers as Moscow seeks ways to raise revenues, industry sources told Reuters on Wednesday, although the Kremlin said no decision had yet been taken.

The tax rise under review, which would affect firms including Norilsk Nickel, Rusal, Phosgaro , NLMK, Severstal and Evraz , would be introduced from 2021, the sources said.

Producers of gold, diamonds and coal are not included in the proposal being looked at by Russia’s finance ministry, which would raise an additional 90 billion roubles ($1.2 billion) a year, Kommersant newspaper reported and the sources said.

A higher tax would also hit Russia’s emerging and state nurtured production of rare earth minerals

“No decisions have been made as of yet,” Kremlin spokesman Dmitry Peskov said during a daily call with reporters.

“Of course, the finance ministry is acting in line with the circumstances created by the pandemic and the global economic crisis that was triggered by the pandemic. An expert discussion is under way,” he added.

Russia’s budget is facing a deficit for the next three years as a result of weak oil prices and the economic fallout of the coronavirus crisis.

Russia’s industry and trade ministry made the estimate in a letter to the government, which was seen by Reuters, which said that the tax would hit investment and production costs.

A higher tax would also hit Russia’s emerging and state nurtured production of rare earth minerals, the industry ministry’s letter said and requested a meeting with the government to enable further discussion of the initiative.

The finance and trade and industry ministries did not respond to requests for comment. Metals and fertiliser producers contacted by Reuters on Wednesday declined to comment or did not reply to requests for comment.

($1 = 74.9075 roubles)

(By Anastasia Lyrchikova, Polina Devitt, Darya Korsunskaya and Gleb Stolyarov; Editing by Louise Heavens, Jason Neely and Alexander Smith)

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