News
The Russian government is taking steps to incentivize foreign refineries to take in Russian oil. New measures would allow companies processing Russian oil on a tolling basis outside the country to receive a reverse excise tax under the same scheme as refineries within Russia do, Russian state-owned news agency TASS reported, citing Russia's Deputy Finance Minister Alexey Sazanov.
A reverse excise is a tax mechanism through which the government refunds part or all of the excise duty previously paid by producers, effectively turning a tax into a form of subsidy. In Russia’s oil industry, the reverse excise on crude oil and petroleum products allows refineries to receive compensation from the state if they process oil domestically rather than exporting it as raw material. This mechanism was introduced as part of the so-called “tax maneuver” to encourage more oil refining within Russia, to maintain the profitability of refineries, and to reduce the country’s reliance on crude exports.
The new tax benefits will be enshrined as amendments to the Tax Code prepared by the ministry for the second reading of a bill that contains a larger package of budget initiatives. As Sazanov described it:
“The arrangement is the same, yes. The settlement procedure is similar to that for Russian refineries, based on the volume of petroleum products produced per ton of processed oil.”
According to the Finance Ministry representative, organizations that are eligible to receive the payment will be included in a special list approved by the Russian government.
The move appears to be a response to increased sanctions pressure on Russia’s oil industry. On Oct. 23, the United States imposed sanctions on Russia’s two largest oil producers, Rosneft and Lukoil. Their counterparties have to complete all transactions with these oil giants before Nov. 21.