Russia considers profit tax on companies to stimulate investment at home

Finance minister Anton Siluanov. Credit: Wikimedia Commons

Russia is considering a new profit tax for a very small number of companies to stimulate them to invest more at home and pay less in dividends, finance minister Anton Siluanov told reporters on Tuesday.

The proposal is being discussed as part of possible government changes to some taxes for the metals industry, but will include other industries if it is approved, the minister said.

“We have an idea to encourage companies to leave more money in Russia, to invest in new projects, to pay less dividends,” he said, adding the proposal was being discussed with businesses this week.

President Vladimir Putin in March urged Russian exporters of metals and other big companies to invest more for the good of the country.

The aim of such a profit tax, if it is approved, will be to stimulate investment, not to obtain additional proceeds for the state budget, Siluanov said.

He said that the proposal was being considered only for a very small number of companies. He declined to name them, but said that banks will be excluded, while some state companies could be part of the plan.

Moscow previously said that it was considering changing a mineral extraction tax (MET) for metals producers amid high global prices for their product.

Russian producers of steel, iron ore, coking coal, fertilisers and mixed ore, such as mined by Nornickel, will provide some 160 billion roubles ($2.2 billion) in additional proceeds to the 2022 state budget via the new MET, Siluanov said.

Annual proceeds of similar size will be expected from them in the budget in 2023 and 2024, the minister said.

This plan includes new MET tax for some of the miners and a tax on semi-finished steel products, he added.

($1 = 73.1716 roubles)

(By Darya Korsunskaya and Polina Devitt; Editing by Barbara Lewis)


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