The Russian government has approved a plan to introduce a profit-based tax on the oil industry as of January 2019. The tax was initially planned for 2018 but disagreements over the reform among ministries has been stifling its progress. Besides, the tax amount has not been specified so far. Four types of fields will be concerned, mainly some depleted assets in Western Siberia fields that benefit from lower export duties and new fields in Western and Eastern Siberia.
The Russian tax system is currently based on production via the mineral extraction tax (MET) and exports. The tax is adjusted to reflect the global oil prices fluctuations along with the depletion and the volume of oil reserves. The new tax will initially apply only to some pilot projects before being introduced at full scale in 2019.
The tax legislation is expected to be approved by the lower house of parliament in the first quarter of 2018, then by the upper house and the Presidency before being translated into law.
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