The expansion of the Additional Income Tax (AIT) regime, which now covers more than half of Russia's taxable oil production, has played a key role. Revenue from AIT increased 2.5 times in the first half of 2024, rising from RUB 403 billion in January–June 2023 to RUB 1.042 trillion in January–June 2024, according to data from the Ministry of Finance. Over the same period, the share of AIT in the structure of oil and gas budget revenues grew from 12% to 18%.

Unlike the Mineral Extraction Tax (MET), AIT is calculated not based on the volume of extracted resources but on the revenue from their sale minus production and transportation costs. The introduction of AIT coincided with a major tax maneuver launched in 2019, which was no coincidence. The Ministry of Finance aimed to bring additional funds into the federal budget by gradually zeroing out export duties in exchange for a proportional increase in MET. AIT became a sort of bargaining chip, introduced in 2019, offering oil companies the opportunity to reduce their tax burden for depleted West Siberian fields and new fields in East Siberia requiring substantial infrastructure investments. In turn, AIT allowed the Ministry of Finance to partially address the issue of growing MET benefits, which had made the Tax Code increasingly resemble a geologist’s reference book.

While in 2019, the share of AIT in Russia's taxable oil production stood at 9%, by 2023, it had reached 52% (as reported by Deputy Prime Minister Alexander Novak in a February article for the Energy Policy journal). In practice, the experiment succeeded: AIT became a kind of "shock absorber," helping oil companies adapt to new conditions after 2022. Similar mechanisms, allowing for tax burden adjustments depending on profitability, should also be extended to oil refining. There, companies face rising costs due to extended timelines for unscheduled repairs.




Sergey Tereshkin, CEO of the OPEN OIL MARKET marketplace for petroleum products and raw materials.



Translated using ChatGPT