RUSSIA TO SWITCH OVER TO GRADUATED OIL TAX

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MOSCOW, March 5 (RIA Novosti) - According to the Finance Ministry, a graduated tax on oil recovery may be introduced in Russia, but not until after 2006.

The main problem of the current flat tax is that it does not differentiate between specific geological, geographic and economic conditions in which oil deposits are developed, the ministry says in a report on tax policy guidelines.

At this point, the government does not have sufficient data to be able to analyze the impact such factors really have on the effectiveness of the development of each particular oilfield. Which is why, according to the ministry, the introduction of a graduated oil tax may become realistic only in 2007.

The idea behind switching over to the graduated tax is to encourage petroleum producers to invest in prospecting and get new oil-rich deposits and regions up and running.

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