BELARUS NEWS AND ANALYSIS

DATE:

28/11/2006

Russia to Prevent Belarus from Earning on Its Crude

Russia's intention to impose duties on crude export to Belarus starting from 2007 will probably materialize. Another attempt of Moscow and Minsk to agree on splitting the revenues from export duties on petroleum produced by Belarus' refineries from Russia's crude has eventuated in failure.

The good intention notwithstanding, on November 24, Russia and Belarus proved unable to come to terms and initial the draft agreement on splitting petroleum export duties, one of negotiators told PRIME-TASS yesterday on condition of anonymity.

Russia that imposes no duty on crude export to Belarus is pressing for splitting the revenues derived from the export of diesel fuel, black oil and gasoline produced from Russia's crude. Moscow wants to get what it thinks is due to it when the petroleum produced from Russia's crude is delivered to the third party, i.e. to Europe. The latest proposal of the Kremlin is splitting the revenues 85 percent to 15 percent in its favor.

But today's stumbling block is not the above ratio, which Belarus doesn't challenge now, but rather the methods of calculating, the anonymous negotiator said. Belarus insists on deducting the VAT in time of calculation. VAT is paid when delivering crude to the country from Russia, and Belarus itself applies this deduction to make the petroleum export competitive.

Russia opposes this arithmetic, as there will be nothing to share if it is applied. With VAT taken into account, the effective rate of duty (i.e. the duty actually paid by Belarus exporters to the budget) doesn't exceed 20 percent of the nominal one.

Source:

http://www.kommersant.com/p725383/crude_duty_export/