The Supreme Court put an end to the dispute over the calculation of the mineral extraction tax for platinum miners

The Supreme Court (SC) of the Russian Federation issued a decision on the dispute between the Kosvinsky Kamen company and tax authorities regarding the calculation of the mineral extraction tax for the extraction of platinum concentrate. The Economic College of the Supreme Court supported the position of the taxpayer, who insisted on the right to apply a rental coefficient (Krenta) of 1 instead of 3.5. This decision should put an end to disputes between platinum mining enterprises and tax authorities.

In January 2021, Krenta, applied to the mineral extraction tax rate, appeared in the Tax Code (TC). The Code sets the Krent equal to 1 if the concentrate contains gold or silver in the mining of precious metals, and for other metals it is set at 3.5. The Federal Tax Service (FTS) considered that the reduced coefficient can only be applied to concentrates containing exclusively gold and silver. This resulted in a significant increase in the amount of tax for the platinum mining industry (from 6–6.5% to 21–22%), which led to the shutdown of a number of enterprises.

The miners sued the tax authorities, but the practice was in favor of the Federal Tax Service. In particular, CJSC Kosvinsky Kamen (develops the Tylay-Kosvinskoye deposit in the Sverdlovsk region, its reserves of platinum and gold at the end of 2021 amounted to 4.3 tons) disputed the additional accrual of the mineral extraction tax for August 2021. According to the enterprise, it has the right to use Krenta 1, since the extracted concentrate contains 0.28% gold, and the share can be any. But the arbitration courts sided with the tax authorities, noting the insignificant share of gold in the concentrate (see “Kommersant” dated November 9).

Based on a complaint from Kosvinsky Stone, the case was transferred to the Economic Collegium of the Supreme Court, which supported the taxpayer. The Supreme Court recalled that Krenta was introduced for the purpose of “fair (proportionate) taxation” of highly profitable mining and should not create obstacles to the implementation of any type of activity. At the same time, in the Tax Code there are no restrictions on the use of Krent 1 depending on the proportion of gold (silver) in the concentrate. Tax authorities do not have the right, at their own discretion, to apply a coefficient depending on the size of the metal share and establish “arbitrary tax conditions for individual taxpayers,” the Supreme Court noted. The tax authorities’ decision was overturned.

Taxology partner Alexey Artyukh considers the decision of the Supreme Court useful for all subsoil users extracting concentrates containing any share of gold or silver: they will be able to calculate the mineral extraction tax using a coefficient of 1. Moreover, if such companies previously used Krenta 3.5, they can apply for a refund of overpaid taxes, the lawyer clarifies.

Read more in the material “Tax as part of the platinum group”.

Anna Zanina