Windfall Tax- Russia Looks To Cover Plunging Oil Revenue

Moscow is planning to go ahead with a one-time windfall tax on large companies as a stopgap step to keep a check on the dangerously falling oil and gas revenues that have left the oil-rich country with a deficit of $25bn.

As per RIA Novosti, a Russian state news agency, Russia is looking to get a voluntary one-off contribution from big companies.

The unnamed sources familiar with this development suggest that there has been a proposal as well as a counterproposal that has already been tabled. The first proposal comes from Mikhail Mishustin, the prime minister of Russia, asking members of the Russian Union of Industrialists and Entrepreneurs to give a one-off fee of $2.8 billion to the government. Apparently there has been a counter proposal from the RSPP which suggests for a .5% surge in the existing income tax which is levied on the companies.

The ministry of finance in Russia although is not considering to increase the income taxes. According to the Deputy Prime Minister, this is no where a tax increase. It just happens to be a windfall tax, which is a concept in tax practise called as one time tax collection.

However, this contribution as a windfall tax is going to be voluntary. It is well to be noted that Russia’s revenues from oil and gas have plummeted in January by almost 46% as compared to the same month last year because of the sanctions that are now taking shape on Russian oil exports, which have already led to a slump in the price of flagship crude.

In January this year, the Russian flagship Ural grade averaged 42% lower in terms of price than in January 2022, following an EU embargo as well as a G7 price cap that came into effect last December. If we talk of figures, the average price of Urals in January was $49.48 per barrel, which was 1.7 times less than what was witnessed in January 2022, when it averaged $85.64 a barrel.