The Ministry of Finance proposed a single duty rate on fertilizers of 8% – Kommersant

Ministry of Finance published draft resolution on the introduction of a single export duty rate for fertilizers in the amount of 8% by the end of 2024. Because of the existing norms, only 6 billion rubles were received in the budget for six months. (in 2023 – 119 billion rubles). After the innovations, the Ministry of Finance expects the receipt of 87 billion rubles. until 2025.

Now the duty is charged when the export value of fertilizers exceeds the threshold of $450/t, the rate is 23.5% of the difference between the customs value and $450. At a price lower than the company does not pay duty. Russian media earlier reportedthat the income was not comparable with the amounts that were planned to be collected.

The Ministry of Finance notes that, despite low budget revenues, the fertilizer industry “retains sufficient operating profitability, allowing mineral fertilizer producers to fulfill their plans within the framework of approved investment programs.” Thus, the profitability “in terms of profit before deducting interest expenses on loans and credits, taxes, depreciation and amortization” in the first quarter ranged from 48% to 59% (in the first quarter of 2022 – from 48% to 75%).

“As a result, in order to maintain the planned revenues to the federal budget, it is necessary to “adjust” the existing mechanism for customs and tariff regulation of the export of mineral fertilizers,” the explanatory note says.

For the major fertilizer producers, withdrawals are expected to average 10% of operating income and 15% of free cash flow for 2022. The Ministry of Finance believes that the adjustment will not have a “significant negative impact” on the long-term development of the industry and will keep manufacturers “sufficient operating profitability” for their investment programs.

Leonid Uvarchev