The tax manoeuvre in the oil sector to remove more than 100 refineries from the market.

Now there are currently about 200 refineries in Russia, but only about three dozen of them are large. The overwhelming majority of the rest are low level of efficiency enterprises, they only exist due to the differential in the duties, Ilya Trunin, the director of the RF Ministry of Finance tax department, states. The tax reform in the oil sector will remove this differential - and the inefficient refineries will disappear, he expects.

The existence of the mini-refineries, i.e. approximately 150 plants, is questionable, another official of the RF Ministry of Finance states. In reality the loss will be even greater, according to a federal official: the country has about 300 different "samovars" (illegal mini-refineries), the RF Ministry of Energy’s registry ignores them.

In 2014 the limit coefficient in the oil duty formula was 59%, while the duty on heavy oil was 66% of the oil; the refineries with a minimum depth of processing produce cheap oil, and almost all of it is sent for export. Crude oil export would be more profitable for the budget, the RF Ministry of Finance officials explained. The government wanted to eliminate this source of refineries’ income by increasing the duties on fuel oil to 100% in 2015, but the oil companies have stated that this will kill the industry, and the RF Ministry of Finance proposed the tax manoeuvre.

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