Russian oil sector needs flexible taxation system

Apr 28, 2004 02:00 AM

A working group of the State Council (a conciliatory body under the president) for the policy in Russia's north has noted the need for a flexible taxation system in the oil sector.
According to the report of the working group, "a long-term state policy in the oil extraction sphere should include the upgrading of the taxation system in the oil sector, i.e. the introduction of a flexible taxation system based on a rental approach."

"To encourage the development of hard-for-access deposits, we should introduce amendments to Part 2 of the Russian Tax Code in the section of taxation differentiation for developing hydrocarbon deposits depending on the depth, productivity and development phase of the deposits, their distance from the production infrastructure," the document says.
Besides, the working group believes that requirements and conditions should be toughened for issuing licences and ensuring an effective control over the development of the deposits. The section regarding the mining sector points out the importance of facilitating licence issuing for mining companies.

"Such enterprises should be provided with the opportunity to choose from the list of deposits already developed in detail and funded by the state, with certain obligations to cover the expenditures on the geological exploration of the subsoil," the report runs.
On the whole, the report says, "the main goal of state regulation in the economic development of the North should be accelerated transition from predominant exploration of natural resources to balanced development of industrial sectors providing higher living standards for people and the preservation of the North's ecological system."

Source: Russian Information Agency Novosti
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