Federation Council withdraws increased income tax on LNG exports of Gazprom and its subsidiaries

MOSCOW, February 15 – RIA Novosti. Senators passed a law exempting Gazprom and its subsidiaries from higher income taxes for liquefied natural gas (LNG) exporters.

In November last year, a law was passed for 2023-2025 increasing the income tax rate from 20% to 34% for LNG exporters who have exported at least one batch of such gas by the end of 2022.

The approved law removes Gazprom and its subsidiaries from the increased income tax rate. This change will apply to legal relationships arising from 1 January 2023.

The original version of the document, when evaluated by the State Duma, concerned only the procedure for imposing VAT and income tax on participants in service risks and financing management agreements concluded during geological exploration and hydrocarbon production. But within the framework of the second reading, lawmakers supported a number of additional changes, including the clarification of the increased category of income taxpayers when exporting LNG.

As a result, in 2023-2025, the 34% income tax will be paid only by users of federal subterranean lands, the license of which is to build an LNG plant by January 1, 2013. the transfer of produced gas to such a facility for liquefaction in such or other federal subsoil lands licensed after January 1, 2013. Thus, Gazprom and its subsidiaries were exempted from the said increase rate.

In addition, the amendments extend the deadline for the completion of the modernization of oil refining capacities required to levy reverse excise duty on petroleum feedstock. This is due to restrictions on the export of technologies currently imposed on the Russian Federation: if foreign suppliers refuse to supply equipment, you have to order new ones, said Alexei Sazanov, Deputy Minister of Finance of the Russian Federation.

The amendments also clarify the rules for taxation of transactions with benzene, paraxylene, orthoxylene, and in this case, the conditions for providing tax breaks.

The law must enter into force from the date of publication, and the rules for the modernization of benzene, paraxylene, orthoxylene and oil refining capacities – one month after its publication, but before the first day of the next excise tax period.