Russia should get firms to pay environmental fines from profits, says PM

The 21,000 tonnes of diesel leaked into rivers and subsoil on May 29 in the remote Arctic city of Norilsk.

Russia should get companies to pay compensation for environmental damage from their net profits rather than expenses after Nornickel’s payment of a $2-billion fine for a fuel spill reduced its tax base, the prime minister said on Wednesday.

Nornickel paid the unprecedented environmental fine for last year’s spill in March. The was made to Russia’s federal budget, not to the Siberian Krasnoyarsk region, where the metals miner is a major taxpayer.

“Serious conclusions were drawn after the biggest accident at the power plant in Norilsk. The damage there will be repaired at the expense of those responsible,” Mikhail Mishustin told the Duma, the lower house of parliament.

“But such costs should not be financed by companies as current expenses. This reduces profit, and therefore taxes to regional budgets. And it turns out that repairing the damage is essentially happening at the expense of ordinary citizens,” Mishustin added.

The prime minister, former head of Russia’s tax service, suggested that environmental damage, if there is any, should be paid from companies’ net profit, and “only then would owners and top executives bear the responsibility”.

Russian companies normally pay a 20% profit tax, of which 3% goes to the federal budget and 17% to regional ones.

Nornickel declined to comment.

The miner paid the fine from $2-billion it set aside in reserves in 2020 which were included in its “other operating expenses” and reduced its operating profit, according to its 2020 financial report.

Nornickel’s 2020 net profit fell by 39% to $3.6-billion. The income tax fell to $945-million from $1.6-billion in 2019.

Officials in the Krasnoyarsk region said last year their budget would receive 20-billion roubles ($270-million) less than it could have received as the funds from Nornickel’s fine went to the federal budget.

(By Anastasia Lyrchikova, Darya Korsunskaya and Polina Devitt; Editing by Nick Macfie)


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