September 8, 2011
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№ 6 (June 2011)

Russian Parliament Approves Zero-Rate Subsoil Tax For Select Fields

The Russian legislature, or Duma, passed amendments to the law subsoil mineral taxes in the third reading which will will zero-rate the tax on operations on several oil and gas fields meeting certain requirements. The amendments are being made to Article 342, Part II of the Russian Tax Code.

By A.N.G.I.

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The documents stipulate a zero-rate tax on mineral production when producing crude on fields which are either wholly or partially located on the Black and Okhotsk seas: for fields on the Black Sea, this will cover fields with production of up to 20 million tons of crude in the initial stages and on the Okhotsk Sea for production of up to 30 million tons.

The period over which reserves at such fields are produced should not exceed 10 years (or be equal to 10 years) when the field in question is in the e&p stage and not more than 15 years (or equal to 15 years) when geological studies are being performed.

According to the law, the zero-rate subsoil mineral tax covers crude produced in the Yamal-Nenets autonomous district north of the 65th latitude and at which production has reached 25 million tons under the circumstances that development of the field has not exceeded 10 years, RBK reports.

The zero-rate tax is also envisioned for gas produced on the Yamal peninsula exclusively for making LNG.

Furthermore, from January 1, 2013 through 31 December 2017, the zero-rate subsoil tax will cover some ore mining in the Far East.

This federal law comes into effect on January 1, 2012, but no earlier than one month after being officially published and no earlier than the first day of the subsequent tax period.
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