The government is considering linking exchange rate export duties to world prices
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The government is considering the possibility of supplementing the export duty tied to the ruble exchange rate, proposing to take into account world prices for taxable goods in its formula. Thus, if prices fall below a certain level, then the duty will not be applied, as well as if the ruble exchange rate depreciates. Market participants believe that it is fundamentally important which indicator will be used and at what level the price for zeroing the duty will be set. They also warn about the dangers of using indices of unfriendly countries.
A Kommersant source in the government said that they are discussing the possibility of changing the mechanism of exchange rate export duties by adding them to the formula for calculating world prices for relevant goods. The point is to make things easier for exporters. Thus, the duty can be reset not only if the exchange rate goes down, but also when world prices for goods are below a certain level. Kommersant’s interlocutor did not provide details of the calculation, but clarified that a decision could be made within two to three weeks.
The Ministry of Finance did not respond to Kommersant’s request; the Ministry of Economy, the Ministry of Industry and Trade and the secretariat of First Deputy Prime Minister Andrei Belousov did not provide comments.
From October 1, the government introduced flexible export duties on a wide list of goods supplied outside the EAEU, from which oil, gas, grain, timber and a number of other goods are excluded. They begin to operate when the dollar exchange rate is above 80 rubles. and amount to 4–7% depending on the rate. The additional burden on exporters should bring the budget 151 billion rubles this year, and 604 billion rubles in 2024.
Participants in the markets for goods subject to exchange rate export duties interviewed by Kommersant are unanimous that the performance of the updated mechanism depends on what indicator will be used as the basis for calculating world prices and at what level the cut-off price will be set.
Steel is not a commodity, but there are price benchmarks that can be monitored, notes Kommersant’s interlocutor on the metal market. The main agencies publishing such information are located in unfriendly countries – Platts, Metal Bulletin, Argus, CRU. It is possible that price benchmarks from the Russian MMI agency will be used for ferrous metallurgy and coal.
Kommersant’s interlocutor says that he has already seen reports from the Gazprombank analytical center, very similar to Argus, with price benchmarks for export coal in Russian ports. Gold, silver, platinum group metals, almost all industrial metals (copper, aluminum, zinc, nickel, etc.) are exchange metals. There are also exchange-traded instruments for iron ore (Singapore swaps). It is not entirely clear what to do with fertilizers: this is not an exchange commodity, and the quotes that market participants rely on are published by price agencies, mostly Western ones.
“In China, everything is traded on the stock exchange, even chicken eggs,” says Kommersant’s interlocutor. “Therefore, it is important which benchmarks and platforms it will be linked to. For example, gold is traded on the LBMA in London, but the Shanghai Gold Exchange is gaining more and more strength, where the main pricing may soon move, according to a number of experts.”
Independent industrial expert Maxim Shaposhnikov notes that the LME has price indices for almost all metals: “The problem is that linking our duties to the indicators of unfriendly exchanges is not a very smart political decision. On the other hand, the Shanghai Stock Exchange has analogues for almost all London Stock Exchange quotes. In addition, in exceptional cases, you can use quotes from the St. Petersburg Stock Exchange or domestic pricing agencies (for example, Gazprombank Central Information Center).”
Kommersant’s interlocutor on the oil and fat market says that the optimal option would be to set a minimum ruble price, above which a duty begins to apply in order to maintain a certain level of profitability for producers and exporters. According to him, vegetable oils are a commodity commodity, that is, the average index can be calculated based on stock quotes.
The President of the Association of Fishing Fleet Shipowners, Alexey Osintsev, notes that there is no “world” price for fish products as such, so it is completely unclear what the link could be. The President of the All-Russian Association of Fisheries German Zverev says that the algorithm for calculating world prices, which will be compared with the prices of exporters, is already established in the Tax Code. Most likely, the method of comparable market prices (Article 105.9 of the Tax Code of the Russian Federation) or financial indicators and profitability intervals (Article 105.7 of the Tax Code of the Russian Federation) will be used, he believes.
According to the head of Infoline-Analytics, Mikhail Burmistrov, the mechanism is expedient, and under the conditions of established currency restrictions it is easier to implement. Considering that most exporters are under strict currency control, no benchmarks are needed, the expert believes: based on the data of companies that fell under currency control, a sample can be made of real transactions, averaged, converted into rubles at the exchange rate, and this indicator is the actual the value of exports, expressed in rubles, is used as the basis for the model.
The world price, Mr. Burmistrov emphasizes, has little meaning if Russian companies cannot sell goods in a number of markets at that price. In his opinion, the real value of exports, converted into rubles, is a more adequate indicator, and besides, it does not need to be made completely open so as not to affect the interests of companies that operate under strict sanctions restrictions.
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