Russian MPs approve bill on zero mineral tax rate for new oil fields

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MOSCOW, July 7 (RIA Novosti) - Russia's lower house of parliament adopted a bill in the second reading Friday establishing a zero mineral extraction tax rate for new oil deposits.

The bill, passed by 362 against 12 votes, with 226 votes required, applies to oil fields in Siberia's Yakutia Republic, Irkutsk and Krasnoyarsk Regions.

The document also envisions a sliding coefficient of mineral extraction tax for oil fields that are 80% depleted or more.

The bill is designed to encourage oil companies to invest in new deposits and also to use expensive technologies to prolong the production life of older deposits.

It is expected to boost budget revenue in the future by sustaining production rates at oil fields currently in use, and raising production at new fields.

Tax holidays will be in place for ten years for oil and gas production licenses, and for 15 years for prospecting licenses. Tax breaks can be withdrawn ahead of time if oil production reaches 25 million metric tons a year (502,000 bbl/d).

The document is to be considered at a third reading Saturday.

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