Russia proposes raising extraction tax rates on diamonds, gold, iron ore

MOSCOW: Russia’s finance ministry on Monday proposed increasing mineral extraction rents from next year on diamond, gold and iron ore mining, changes that could boost tax revenues by 230.5 billion roubles ($2.59 billion) from 2025-2027.

The government last week approved tax hikes for companies and wealthy individuals that could add an extra $30 billion to next year’s budget revenues and will allow Moscow to further ratchet up spending, including on the conflict in Ukraine, without compromising fiscal stability.

The ministry’s latest proposed tax hikes would be offset by the abolition of export duties linked to the rouble-dollar exchange rate that were introduced in October 2023.

“Increasing the mineral extraction tax alongside a simultaneous refusal to collect ‘exchange-rate’ export duties from Jan. 1, 2025 will not lead to reduced company profits and, accordingly, to regional budget losses on corporation tax,” documents submitted to the State Duma by the finance ministry showed.

The ministry proposed raising the tax rate for extracting diamonds and precious stones to 8.4% from 8%, an annual boost of 2.1 billion roubles to the treasury.

Adjustments to the mineral extraction tax on gold would bring in 25.5 billion roubles annually, while raising rents on iron ore mining to 6.7% from 4.8% would add 23.1 billion roubles each year.

Other proposed changes concern raising extraction rates on apatite-nepheline, apatite and phosphorite ores, adjusting coal premiums and an excise tax on natural gas for ammonia production.

“These measures are aimed having a fairer distribution of natural rents between business and the state,” the submitted documents said.