The Russian government has agreed on a new mineral extraction tax (MET) formula with steel, iron ore, coking coal, and metal companies, which is anticipated to boost the country’s economy substantially.
At the same time, it has decided to abandon plans to implement a profit tax based on a formula and directly connected to prior dividends and investments. According to Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, the plan has to be revised and will not be implemented until at least 2023. He went on to say that the whole notion of a profit tax is going to wreak havoc on the country’s investment climate.
Metal firms will contribute an additional 160 billion roubles ($2.2 billion) to the state budget in 2022 as a result of the new MET. These firms are expected to contribute roughly the same amount to the government in the following two years, according to the Finance Ministry.
Starting next year, the new MET for iron has been set at 4.8 percent, down from the original rate of 5.5 percent. Meanwhile, the tax on semi-finished steel goods would be 2.7 percent, down from the Finance Ministry’s planned 3 percent.