Moody's - Russian oil sector cash flows to benefit from new profit based tax
Almaty. January 17. KazTAG - New tax system credit is positive for Russian oil sector, reports Moody's Investors Service.
According to the report, oil companies developing greenfield sites in Eastern Siberia to gain most.
The introduction of a profit-based taxation (PBT) system from 1 January 2019 is credit positive for the industry, Moody's Investors Service said in its latest report on the sector. Moody's estimates that by company the percentage of crude oil production subject to the PBT system will range from 10% to 30% by 2020-24.
The new tax regime will encourage oil companies to develop deposits previously considered uneconomical by lowering the tax burden during initial development stages and bolstering after-tax revenues at later stages.
"Companies developing oil fields in Eastern Siberia will benefit the most from the switch to the PBT system, as their after-tax revenues will be higher at the initial stages of field development," says Denis Perevezentsev, Vice President - Senior Credit Officer.
While brownfields in Western Siberia will have the highest tax burden under the PBT system the total tax charge will still be lower than under the current tax system (without any allowances). For greenfields in Western Siberia, the tax burden will rise after the first two years of production, but remain lower than current levels.
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