Russia is phasing out the oil export tax. All that money can now be invested in expanding production instead
The Russian energy and finance ministries agreed with oil companies to start cutting the export duty on crude gradually, to bring it from the current 30 percent to zero over the next six years, government sources told Reuters.
The duty will be cut by 5 percent annually over the period, as part of a wider tax reform that seeks to replace the export duties and mineral resources extraction taxes with a single tax based on the profits that oil companies in Russia make.
The idea of phasing out the export duties is not new. Last year, Finance Minister Anton Siluanov said the end of the duty will come no earlier than 2022-2025. Now, the six-year phase-out plan will see it gone by 2023. This compares to earlier and much more ambitious plans to have it scrapped by 2020.
The tax overhaul is also connected to plans announced by central bank governor Elvira Nabiullina in 2016 to reduce the federal budget’s reliance on the exports of mineral resources. The plan was announced at the height of the oil price crisis. At the time, Nabiullina admitted this will not be an easy or smooth process, but it could contribute to the country’s economic growth.