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20 Dec 2018

Belarus’ losses in wake of Russian tax maneuver projected at $383m in 2019

Belarus’ losses in wake of Russian tax maneuver projected at $383m in 2019
Igor Lyashenko. Photo courtesy of the press service of the Belarusian Embassy in Russia - BelTA

MINSK, 20 December (BelTA) – Belarus’ losses in the wake of the tax maneuver in Russia in 2019 will amount to $383 million, Belarus Vice Premier Igor Lyashenko said at a joint meeting of the House of Representatives and the Council of the Republic, BelTA has learned.

During six years, starting 2019, Russia will be reducing export customs duties on oil while commensurately increasing the tax rates on oil production. The vice premier told the members of the parliament how this will affect Belarus. For Belarus this will result in the annual increase in oil prices by about $21.3 per tonne with the prospects of reaching the level of global oil prices by 2024 ($70 per barrel).

Financial standing of the refineries will deteriorate. The economic deterioration of the oil refineries because of the tax maneuver in 2019 is estimated at $240 million, the budget will be short of $143 million in taxes, Igor Lyashenko noted.

The Russian Federation introduces new mechanisms to subsidize domestic oil processing companies – the so-called negative excise duty and additionally provides budget support in the form of coefficient compensating the producer half the difference between export prices and domestic market prices. In Belarus there are no such sources of compensation.

“Even with the abolition of excises on oil products to compensate for the losses of the oil refineries, there will be a need to increase oil product prices on the domestic market. This will lead to a disparity in retail and wholesale prices between Russia and Belarus,” said Igor Lyashenko. The upcoming tax maneuver will result in an increase of retail prices for oil products by 5.7%.

“This is a big issue for the government and the relevant ministries. Negotiations with the Russian Federation continue,” said the deputy prime minister.

 

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