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    CHANGES IN OIL INDUSTRY TAXATION WILL JUSTIFY ITSELF THIS YEAR

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    MOSCOW, April 8 (RIA Novosti) - Decisions to reform the oil industry taxation will give a result this year, said Russian Finance Minister Aleksei Kudrin.

    The government approved Thursday amendments to the law on the customs tariff and to the Tax Code, dealing with oil industry taxation.

    "These decisions will give a result already this year, the more so as we have specified the forecast of oil prices for 2004 toward an increase, that's why budget receipts will be higher," Mr. Kudrin said.

    The minister explained that the new formula for the severance tax will become effective from 2005, and the new scale of export prices for oil, already this year.

    In Mr. Kudrin's words, additional receipts from high oil prices will make it possible to partly compensate for budget losses from the reduction of the unified social tax.

    The minister said the government's proposals in this regard will be submitted to the State Duma in the days to come.

    With the price for oil being under $15 per barrel now, export duty is not levied; with the price at $15-$25 per barrel, the duty is up to 35% from the difference between the actual price for oil and $15 per barrel; with the price at $25 per barrel, the duty is a sum no more than $25.53 plus 40% from the difference between the actual oil price and $25 per barrel.

    As part of the reform, an additional interval of prices from $20 to $25 per barrel will be introduced into the scale and an export duty will be set in this interval at 45%. If the oil price is more than $25 per barrel, the duty will be increased to 65%.

    In the severance tax formula, the basic rate of the tax will be raised from 347 to 400 rubles per metric ton of oil.

    The dollar exchange rate set during the calculation of the severance tax formula at 31.5 rubles is planned to be reduced to 29 rubles to compensate for losses connected with the strengthening of the ruble rate.

    The threshold of oil cost, from which taxation starts, will be increased from $8 to $9 per barrel during the severance tax calculation.

    It is supposed that the main tax withdrawals will be made not at the expense of severance tax but at the expense of export duties, on which some two thirds of additional tax burden with high oil prices will fall.

    According to the reform authors' calculations, the implementation of measures suggested will give the budget additional revenues worth $900 million with the oil price at $24 per barrel, and worth $2 billion with the oil price at $27 per barrel.

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