Russian Duma Approves Tax Breaks For production in Sea of Japan

June 23, 2014

The Russian parliament has established a new mineral production tax rate for new fields in the Sea of Japan. The new law stipulates the rate at 15%. The law also frees raw hydrocarbons from export duties. Legislators intend for the law to maintain or raise the volume of production of hydrocarbon resources in difficult areas which requires the use of innovative technologies.

The 15% tax rate will be in effect for 7 years from the beginning of commercial production. It is to apply through the end of 2032.

For a number of fields in Russia, a zero-rate tariff has been introduced for mineral production.  For fields in Yakutiya, Irkutsk region, and Krasnodar territory, this tae is in effect until production reaches 25 million tons. In the Nenets Autonomous District, the Yamal peninsula and in the Yamal-Nenets autonomous district, the zero-rate tariff will be in effect through production of 15 million tons.

The rate is lowered on the mineral production tax only for fields at which developed reserves are no higher than 0,05% at the beginning of 2015. The law also stipulates that development of fields affected by the new rules must begin by 2022.

Copyright, ProNedra, 2014г.