Russia Approves Gas Tax Hike

A planned Russian tax hike on mineral extraction for gas companies has been implemented yesterday, Russian Deputy Minister for Finance Sergei Shatalov said.

The tax increase will see the tax take for Russian giant Gazprom double. However, independent gas companies, such as Novatek, will be see their tax rate quadruple following the increase.

The tax will be slowly implemented, doubling twice a year for Gazprom until it reaches a shelf rate of 1,062 rubles per 1,000 cubic metres on the 1st of July 2015, the Minister said, compared to the current rate of 509 rubles per 1,000 cubic metres. Independents will see their tax rise to 1,049 rubles per 1,000 cubic metres by the same date.

The tax increase was announced after high spending by President-elect Vladimir Putin in the run-up to recent elections and is designed to fill this gap in the government's coffers.

Gazprom has previously hit out against the planned tax increases, saying it will raise prices to compensate for the loss from taxes, despite instruction from Prime Minister Putin that the company keep prices stable.

Gazprom is due to implement a 26.3 per cent increase in prices to domestic customers from the 1st of October this year, in addition to a 15 per cent increase which is due to be implemented from the 1st of next month.

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