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Russia may extend mineral extraction tax to coking coal

A possible Russian mineral extraction tax (MET) linked to global prices which is being considered for the country’s metals and fertiliser companies could be extended to coking coal producers, two sources at companies familiar with talks told Reuters.

Russia’s finance ministry is discussing new formula of the MET tax which would take into account the revenues of the metals and fertiliser producers as well as the global price for their product.

The talks to fine tune the formulas for each product are expected to take place at the finance ministry on Thursday, the sources said. The final decision on the proposal will be taken by Prime Minister Mikhail Mishustin, sources added.

The finance ministry and the government declined to comment.

Moscow has been searching for additional proceeds for the state budget and has been concerned about rising costs of defence and state construction projects amid high inflation and increasing prices for metals.

It remains unclear how much the MET tax change would bring to the state budget.

The producers are still trying to change the tax plan. They asked the finance ministry to leave the MET as it is and base the tax system on their profits at a meeting on Wednesday.

Russia raised the MET tax for metals firms from 2021 and then imposed temporary export taxes on Russian steel, nickel, aluminium and copper, which will cost producers $2.3 billion from August to December 2021.

The current talks about the new MET tax formulas are part of government efforts to find a permanent mechanism for metals producers to “accumulate part of the profits from these superfavourable market conditions” amid high global prices.
Source: Reuters (Reporting by Darya Korsunskaya, Polina Devitt and Anastasia Lyrchikova; writing by Polina Devitt; editing by Elaine Hardcastle)

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