Bashkortostan parliamentarians suggest introducing tax incentives to stimulate oil companies

UFA, 5 May 2017. /Bashinform News Agency, Galiya Nabieva/. Deputies of the State Assembly of Bashkortostan offer to amend the regional law "On corporate property tax". It is related to establishment of a tax benefit on the corporate property in the amount of 50 percent of the accrued amount of tax in respect of the newly created and (or) acquired property used for extraction, initial preparation and transportation of hydrocarbon raw materials commissioned in the territory of our republic. The project is designed to stimulate investment activity. Yesterday it was considered in the first reading at a meeting of the Committee for Budget, Taxation, Investment Policy and Territorial Development.

Obligatory conditions for obtaining the benefit are to ensure investments in fixed assets of at least 1 billion rubles during one tax period and an increase in the tax base compared to the previous tax period by at least five percent.

The Speaker of the republican parliament Konstantin Tolkachev explained that the benefit will be granted only to new property that had been registered since the beginning of the year. Thus it concerns development, investment projects. Due to the benefit granting, the republican budget will loss a certain amount of funds, the shortfall in revenue will amount to about 300 million rubles a year. However, they will be compensated at the expense of profit tax and personal income tax. This program is meant for three years.

Konstantin Tolkachev is sure that many companies will be interested in obtaining such benefit. It is clear that Bashneft is the main player in this market; however there are a total of 14 enterprises operating in the oil production and transportation sector that fall under the terms of the bill. All of them may be given the benefit.