Kremlin Needs More Time to Decide on Higher Taxes for Russian Chemical, Mining Firms

The issue of possible introduction of windfall profits tax for Russian mining and chemical industries is yet unresolved and is under discussion, Kremlin spokesman Dmitry Peskov told reporters on Friday, according to Banki.

“The position, as it is, is not confirmed yet, it is not formulated as the Kremlin’s or the government’s position, it is still under discussion,” Peskov told reporters, asked whether there were any compromise options in the Kremlin regarding the windfall profits tax introduction.

In early August, Kremlin aide Andrei Belousov asked President Vladimir Putin to consider increasing taxes for Russia’s mining, petrochemicals industries, and fertilizer producers. The move would bring an extra 500 billion rubles ($7.4 billion) to Russia’s state budget annually, Belousov said in a letter.

Among companies considered for the tax hike were Evraz, NLMK, Norilsk Nickel, Severstal, MMK, Metalloinvest, SUEK, Mechel, Alrosa, Polyus, Sibur, PhosAgro, Uralkali, and Acron. On Friday, Belousov and First Deputy Prime Minister, Finance Minister Anton Siluanov met with heads of Russian metal, mining and chemical companies to discuss higher tax rate on their above-average profits.

On August 12, Siluanov said that, when drafting a report on the Belousov proposal, the government would take into account the companies’ arguments and study possible consequences for the investment climate.

Russian metallurgical, oil and gas and chemical companies are the country’s main export earners. The exporters’ profits now see some so-called windfall gain due to macroeconomic factors such as ruble’s weakening against major currencies, the dollar and the euro, in which their products are usually priced.