FinMin to work out lower tax system

Draft laws on a new preferential taxation system for companies operating on Russia's continental shelf will be ready by October 2012, Deputy Finance Minister Sergei Shatalov said on Friday. "There will be bills because changes must be made in the Tax Law and customs tariff law. The bills must be ready by October 1," Shatalov told reporters. There will be no export duties for new hydrocarbon development projects on the Russian shelf, president-elect Vladimir Putin said on Thursday. As for other duties and taxes, they will also be low or fixed within 15 years from the date of the production launch. Mineral extraction tax for the most complex Arctic projects may be nearly five percent from the prices of products sold. The Russian government also suggests lifting property tax and value added tax on unique imported equipment, which Russia does not make, for all new projects regardless of the complexity level, Putin also said. Shatalov also said that the new taxation system would not concern the Prirazlomnoye oil field, Russia's first offshore project in the Arctic, operated by gas giant Gazprom but the export duty could be cut. The Prirazlomnoye field contains 72 million tons of oil. Gazprom expects annual output to reach 6.6 million tons. As for the Shtokman gas project in the Russian sector of the Barents Sea, Shatalov said he did not know if it was included in the discount tax system and a separate decision concerning it was possible. Implementation of the shelf projects will allow attracting about $500 billion of direct investment into the oil and gas industry and about $300 billion in related industries in the next 30 years. Project implementation will also create up to 400,000 jobs.