Russia’s finance ministry has said the country plans to cut the rebate it uses to levy taxes on the country’s crude oil exports from $25 to $20 per barrel. As a result of Western sanctions imposed on Russia following its invasion of Ukraine, the country has adopted a new approach to taxing oil sales. Russian President Vladimir Putin signed a law in February that established a fixed discount for tax calculations on Russia’s main crude oil mixture, the Urals.
These changes were made to address the economic impact of the sanctions and change the country’s oil sales tax system. Western countries have also imposed a price cap of $60 per barrel on Russian crude.
In an interview with Russian news site Argumenty I Fakt on Tuesday, Finance Minister Anton Siluanov said: “Now the estimated rebate is $25 per barrel for Brent. We plan to lower it to $20 per barrel. We are considering further measures to improve the calculation of taxes on oil exports. Brent today is $80 per barrel.
Russia saw a 47 percent drop in its oil and gas revenues in the first six months of fiscal year 2023-2024 compared to the previous year, according to a Reuters report. The Treasury Department attributed this decline to lower Ural crude oil prices and a decline in natural gas exports.
Siluanov also said that by the end of the year, the budget deficit will be about 2-2.5 percent of gross domestic product (GDP).
“We have enough resources to cover planned expenses and additional expenses,” Siluanov said.
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India has been enjoying deep discounts on Russian crude oil since the war in Ukraine, although shipping costs are higher than usual. Indian refineries bought less than 2 percent of their total crude oil supply from Russia in the pre-Ukrainian wartime, this rose to 44 percent due to lowered prices. However, according to a recent PTI report, the discount on Russian Ural quality has fallen from about $30 a barrel in the middle of last year to almost $4 a barrel.