Due to Russia's taxation system, the Russian budget will receive up to US$10 billion more from local oil firms in 2020, Deputy Finance Minister Alexey Sazanov told Reuters in an interview published on Monday.
Russia's economy is struggling this year because of the measures to contain the coronavirus pandemic and the plunge in oil prices, which is reducing the budget revenues from Moscow's principal export, oil.
While it would lose revenues from lower crude oil sales and lower oil prices, the Russian budget will benefit from up to US$10 billion (700 billion Russian rubles) in additional taxes from the oil companies, Sazanov told Reuters.
That is because of the Russian tax mechanisms and its policy to keep fuel prices broadly stable, regardless of the movement of the major international crude oil benchmarks. When crude oil prices are low, oil companies pay the budget. When oil prices are high, Russia pays the companies for keeping fuel prices stable.
This year, at oil prices between $30 and $40 a barrel, the Russian budget will receive up to US$10 billion from the oil firms, due to the tax system, Sazanov said.
"When the budget especially needs cash to meet its obligations ... this works well. Under no circumstances we are going to abandon or revise it," the deputy finance minister told Reuters.
However, the amount of money that the Russian budget will receive from this particular tax policy will not be nearly enough to offset the losses for the budget from the low oil prices.
Russia's revenues from oil and gas will be US$42.8 billion (3 trillion rubles) lower than planned, Russian Finance Minister Anton Siluanov said in the middle of March.
Russia's economy is not going as well as one would have hoped, the finance minister admitted after prices started sliding in March, saying that the oil price factor alone is set to reduce the country's budget income by US$40 billion compared to earlier estimates.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More