Export duties on the export of oil and petroleum products will be zeroed from January 2024

Export duties on the export of oil and petroleum products will cease to exist from January 2024—or, more precisely, will be reset to zero, the Ministry of Finance recalled on Friday. In December, the oil export duty is $24.7 per ton, but from January on a permanent basis it will be equal to $0 (see chart). Export duties on light and dark petroleum products and oils, coke, and commercial and straight-run (naphtha) gasoline will also be zeroed out.

All this is the result of a tax maneuver in the oil industry that lasted almost ten years (adopted in 2014, effective in 2015). We are talking about a gradual reduction in export duty rates on oil and petroleum products with a simultaneous and comparable increase in the tax on its production (MET).

Let us note that the very idea of ​​a gradual abandonment of export duties that are not applied almost anywhere in the world (in foreign trade it is customary to tax imports) appeared back in 2011 – government experts working on Strategy 2020 then wrote a report on this topic. They explained the need to waive the duty by the fact that the preservation of domestic prices for hydrocarbons, which are lower than in the world, reduces the competitiveness of the Russian economy.

In 2014, the Ministry of Finance explained the need for maneuver in a similar way, but a little differently – with the creation of the EAEU in 2015, which forced Russia, Kazakhstan and Belarus to equalize tax and duty rates. As a result, on the one hand, the maneuver brought together the significantly different amounts of Russian and Kazakh duties on the export of oil and petroleum products. On the other hand, he reduced Russia’s subsidies to the economies of partner countries (primarily Belarusian), which received cheap Russian oil duty-free from the Russian Federation.

In 2015, the maneuver started at the same pace, but in 2018, with amendments to the tax legislation, it was decided to speed it up and completely complete it by 2024. Shifting the burden to the mineral extraction tax expanded the tax base of oil workers and added a lot of revenue to the budget – after all, companies pay production tax on all oil, duty – only on exported oil. A side effect of the maneuver was a constant increase in domestic oil prices (inevitable with an increase in the mineral extraction tax) – in fact, that is why the authorities’ maneuver was extended for ten years (the authors of Strategy 2020, we note, even proposed a period of up to 30 years).

Vadim Visloguzov