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Russia mulls new extraction tax and higher profit tax for metals firms -sources By Reuters


© Reuters. FILE PHOTO: A basic view reveals Zapolyarny mine of Medvezhy Ruchey enterprise, which is a subsidiary of the world’s main nickel and palladium producer Nornickel, within the Arctic metropolis of Norilsk, Russia August 24, 2021. REUTERS/Tatyana Makeyeva/File Phot

MOSCOW (Reuters) – Russia’s finance ministry proposed setting a mineral extraction tax (MET) linked to world costs for producers of iron ore, coking coal and fertilisers, in addition to ore mined by Nornickel, 4 sources at corporations aware of talks advised Reuters.

The ministry concurrently proposed a reserve possibility, a formula-based revenue tax that may depend upon the scale of corporations’ earlier dividends and investments at house, the sources mentioned.

Moscow has been trying to find extra proceeds for the state funds and has been involved about rising prices of defence and state development tasks amid excessive inflation and rising costs for metals.

President Vladimir Putin in March urged Russian exporters of metals and different huge corporations to take a position extra for the nice of the nation.

The producers will meet First Deputy Prime Minister Andrei Belousov to debate the difficulty on Saturday, Interfax information company reported, citing unnamed sources. At a gathering on Wednesday, they requested the finance ministry to depart the MET as it’s and base the tax system on their income.

The MET, if accepted by the federal government, would depend upon world worth benchmarks and the quantity of mined product, the sources mentioned. It might have an effect on fertilisers; iron ore and coking coal, that are uncooked supplies for metal manufacturing; and nickel, and platinum group metals, which Nornickel’s ore accommodates.

The reserve possibility, if accepted, would increase the revenue tax to 25%-30% from 20% for corporations that spent extra on dividends than on capital expenditures within the earlier 5 years, three of the sources mentioned.

State-controlled corporations can be excluded from such a choice, as would subsidiaries of holdings whose mum or dad firm holds 50% or extra in them and returned half or much less of dividends from subsidiaries to its shareholders over the five-year interval.

The finance ministry, the federal government, Nornickel, and the principle producers of metal and fertilisers all declined to remark.

It stays unclear how a lot the MET change or the revenue tax change would carry to the state coffers.

Russia raised the MET for metals corporations from 2021 after which imposed non permanent export taxes on Russian metal, nickel, aluminium and copper that can price producers $2.3 billion from August to December 2021.

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