Russia may cancel the excise tax on liquid steel amid a two-fold drop in prices
The Minister of Industry and Trade of Russia, Deputy Prime Minister of the Russian Federation Denis Manturov told Interfax that his ministry, together with the Ministry of Finance, is working on raising the minimum bar for applying a zero excise tax on steel.
According to him, this decision will be a compromise against the background of the fact that the complete abolition of the excise tax on liquid steel was considered inappropriate.
“There are issues related to the adjustment of the tax burden on the metallurgical industry. Here, with colleagues from the Ministry of Finance, they also found a compromise: it was recognized as inexpedient to completely cancel the excise tax on liquid steel, but at the same time we will raise the "cut-off" at a price at which the rate will be zero in the current conditions," Mr. Manturov explained.
The Deputy Prime Minister believes that with an increase in prices in the metallurgical industry, the adjustment of the tax mechanism will provide additional revenue to the budget. He also reported on the work on changing the MET formula for coking coal and iron ore.
Earlier, Mr. Manturov asked Russian President Vladimir Putin to support the adjustment of the excise tax on liquid steel. According to the vice-premier, at present the excise functions as a turnover tax.
“At the time of the surge in prices, this was indeed justified, but now, with the continued decrease in the load and efficiency indicators of the enterprises themselves, we propose to return to this issue,” the head of the Ministry of Industry and Trade explained.
The excise tax on steel came into force in Russia on January 1, replacing the export duties that were in effect from August to the end of December 2021. The excise rate is 2.7% of the average monthly export price of a slab in the seaports of southern Russia; it is not charged if the average export price of a slab falls below $300 per ton.
At a meeting on the development of the metallurgical industry with President Vladimir Putin on August 1, Manturov also spoke about the need to revise the formulas for calculating the mineral extraction tax on iron ore and coking coal for each enterprise, taking into account its specifics.
The draft strategy must be approved by relevant departments, including the Ministry of Finance. The issue of adjusting the MET for iron ore is under discussion, while the Ministry of Finance opposes the abolition of the increased MET for coking coal.