In a move to boost its tax revenues, the Russian finance ministry has proposed increasing mineral extraction rents from next year on diamond, gold, and iron ore mining. These changes could potentially generate an additional 230.5 billion roubles ($2.59 billion) in revenue for the government between 2025 and 2027.
The 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. According to the finance ministry, the increase in the mineral extraction tax, alongside the simultaneous refusal to collect the “exchange-rate” export duties from January 1, 2025, will not lead to reduced company profits and, consequently, to regional budget losses on corporation tax.
Specifically, the ministry has proposed:
Raising the tax rate for extracting diamonds and precious stones to 8.4% from 8%, which would bring an annual boost of 2.1 billion roubles to the treasury.
Adjusting the mineral extraction tax on gold, which would generate 25.5 billion roubles annually.
Increasing the rent on iron ore mining to 6.7% from 4.8%, adding 23.1 billion roubles each year.
The finance ministry also proposed changes to the extraction rates on apatite-nepheline, apatite, and phosphorite ores, as well as adjustments to coal premiums and an excise tax on natural gas for ammonia production.
The ministry stated that these measures are aimed at achieving a fairer distribution of natural rents between businesses and the state.
The proposed tax hikes come after the Russian government approved tax increases for companies and wealthy individuals last week, which could add an extra $30 billion to next year’s budget revenues. This will allow Moscow to further increase spending, including on the ongoing conflict in Ukraine, without compromising fiscal stability.