Global Tax Alert | 9 October 2013

Russian President signs laws on mineral extraction rate and offshore hydrocarbon extraction activities

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On 30 September 2013, Russia’s President signed two Federal Laws impacting the oil & gas industry. Specifically, the law concerning the mineral extraction tax (MET) for gas and gas condensate and the law on the tax and customs regime for offshore hydrocarbon extraction activities have been signed and published. Details regarding the respective laws are summarized below.

Law regarding the MET formula for gas and gas condensate

On 30 September the President signed Federal Law No. 263-FZ regarding establishment of a formula for computing the MET rate for extracted gas condensate and natural fuel gas. The Law was published on the following day.

Before the second reading the draft law was amended to clarify how certain coefficients should apply when calculating MET and to introduce additional coefficients to the MET formula.

The Law also includes amendments to the Tax Code with respect to the MET rate for crude oil and to the Law concerning the Customs Tariff with respect to export duty for crude oil.

The amendments to the Tax Code concerning the MET formula for gas condensate and natural fuel gas come into force as of 1 July 2014.

The amendments to the Tax Code concerning the MET rate for crude oil and those concerning the Customs Tariff Law come into force from 1 January 2014.

Law regarding the tax and customs regime for offshore hydrocarbon extraction activities

Federal Law No. 268-FZ, establishing the tax and customs regime for shelf projects, was signed by the President on 30 September and published on the following day. The Law was not changed since the draft passed in the third reading in the State Duma.1

The amendments introduced to the Tax Code come into force starting 1 January 2014.

The amendments with respect to the Customs Tariff Law come into force 90 days after the publication of the Law and the amendments to the Law Concerning the Continental Shelf came into force with the publication of the Law.

Endnote

1. For a detailed review, see EY Global Tax Alert, Russian Duma passes in third reading draft law on tax and customs regime for offshore hydrocarbon extraction activities, dated 26 September 2013 covering the draft law after the third reading.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (CIS) B.V., Moscow
  • Alexey Kondrashov, Global Oil and Gas Tax Leader
    +7 495 662 9394
    alexey.kondrashov@ru.ey.com
  • Victor Borodin, CIS Oil & Gas Tax Leader, Indirect Tax
    +7 495 755 9760
    victor.borodin@ru.ey.com
  • Alexander Smirnov, Corporate Tax Group
    +7 495 755 9848
    alexander.smirnov@ru.ey.com
  • Richard Lewis, Transaction Group
    +7 495 705 9704
    richard.lewis@ru.ey.com
  • Vladimir Zheltonogov, Head of International Tax & Transaction Tax Services
    +7 495 705 9737
    vladimir.zheltonogov@ru.com
  • Sergey Stefanishin, Legal Services
    7 495 755 9872
    sergey.stefanishin@ru.ey.com
  • Denis Borisov, Director, Moscow Oil & Gas Center
    +7 495 664 7848
    denis.borisov@ru.ey.com
  • Olga Beloglazova, Moscow Oil & Gas Center
    +7 495 755 9700
    olga.beloglazova@ru.ey.com
Ernst & Young LLP, Russian Tax Desk, New York
  • Julia Samoletova
    +1 212 773 8088
    julia.samoletova@ey.com

EYG no. CM3857