Russian lawmakers back tax hike for mining, oil industry at first reading

[September 22, 2020] MOSCOW (Reuters) - Russian lawmakers on Tuesday supported a plan by the finance ministry to increase taxes for some mining companies and the oil industry, as Moscow seeks to plug the holes in its budget left by lower oil prices and the COVID-19 pandemic.

Russia announced the plan, which is expected to bring in 340 billion roubles ($4.5 billion) a year, last week against the backdrop of a falling rouble, loans to support crisis-stricken Belarus and expectations of three years of budget deficit.

Lawmakers voted to approve the bill in the first of three readings in the Duma, Russia's lower house of parliament.

Russia plans to triple the mineral extraction tax (MET) on metals and fertiliser producers, to scrap a zero MET on high-viscosity oil and get rid of a lower rate of MET for mature oilfields. It also plans to increase the excise tax on cigarettes by 20% next year.

The higher tax rate will affect metals producers, including Russia's Norilsk Nickel <GMKN.MM>, RUSAL <0486.HK>, Evraz <EVRE.L>, MMK <MAGN.MM>, NLMK <NLMK.MM> and Severstal <CHMF.MM>, analysts at Sova Capital have said.

It will decrease their 2021 earnings before interest, taxation, depreciation and amortisation (EBITDA) by 0.2%-4.5%, Sova Capital added.

($1 = 75.9600 roubles)

(Reporting by Darya Korsunskaya and Anastasia Lyrchikova; Writing by Polina Devitt and Alexander Marrow; editing by Louise Heavens and Barbara Lewis)

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