Problems and prospects of introducing a tax on financial result (TFR) in the oil industry

VYGON Consulting Director for Business Development Anton Rubtsov reported on problems and perspectives of tax on financial result (TFR) introduction on June 22 at the Analytical Center.

Anton Rubtsov believes that at the moment there are no criteria or a transparent mechanism for selecting pilot projects and no clear concept for how the result of the sector should go about transitioning to the tax on financial result once it’s been tested on the pilot projects. According to Mr. Rubtsov, the impacts of various options of the tax on financial result and excess earnings tax on budget revenue, certain groups of fields and companies should be analysed.

“We also need to use the system of state audit of project documents to select pilot projects and analyse the effectiveness of the TFR as part of the audits. The tax on financial result should be introduced for all brown fields with the rate being gradually increased so it can slowly replace the mineral extraction tax and the export tariff. Then parameters for the excess earnings tax should be developed for greenfields and the new tax should then be introduced there,” Mr. Rubtsov believes.

The meeting was attended by deputies of the State Duma, major oil companies’ representatives, the Energy Ministry of RF and the expert community.