Mineral extraction tax (Russia)

The taxpayers of MET are recognized as subsoil users — organizations (Russian and foreign) and individual entrepreneurs recognized as subsoil users in accordance with the laws of the Russian Federation.

In the Russian Federation, almost all mineral resources (with the exception of the common ones: chalk, sand, certain types of clay) are state. property, and for the extraction of these minerals, it is necessary to obtain a special permit and register as a payer of mineral extraction tax (Article 335 of the Tax Code of the Russian Federation).

Taxpayers are subject to registration as a tax payer for mineral extraction tax at the location of the subsoil plot provided for use by the taxpayer in accordance with the legislation of the Russian Federation within 30 calendar days from the date of state registration of the license (permit) for the use of the subsoil plot. The location of the subsoil plot in this case is the territory of the subject of the Russian Federation on which the subsoil plot is located.

If the taxpayer is extracting minerals on the continental shelf of the Russian Federation , in the exclusive economic zone of the Russian Federation, and also outside the territory of the Russian Federation (if this extraction is carried out in territories under the jurisdiction of the Russian Federation, for example, in territories rented from foreign states) in the subsoil provided to the taxpayer for use, then in this case the taxpayer shall be registered as a taxpayer of local tax of the organization or at the place of residence of a natural person .

The following shall be recognized as the object of taxation for mineral extraction tax (Article 336 of the Tax Code of the Russian Federation):

• minerals mined from the subsoil in the territory of the Russian Federation in the subsoil plot provided for use by the taxpayer in accordance with the legislation of the Russian Federation;
• minerals extracted from wastes (losses) of extractive production, if such extraction is subject to separate licensing in accordance with the legislation of the Russian Federation on mineral resources;
• minerals extracted from subsoil outside the territory of the Russian Federation, if this extraction is carried out in territories under the jurisdiction of the Russian Federation (as well as leased from foreign states or used on the basis of an international agreement) in a subsoil plot provided for use by a taxpayer.

Not recognized as taxable:

• common minerals and groundwaters not listed on the state balance of mineral reserves, extracted by an individual entrepreneur and used directly for personal consumption;
• mined (collected) mineralogical, paleontological and other geological collection materials;
• minerals mined from the subsoil during the formation, use, reconstruction and repair of specially protected geological objects of scientific, cultural, aesthetic, health-improving or other social significance. The procedure for recognizing geological objects as specially protected geological objects of scientific, cultural, aesthetic, sanitary, health or other social significance shall be established by the Government of the Russian Federation;
• minerals extracted from own dumps or waste (losses) of the mining and related processing industries, if they were subject to taxation in the generally established manner when they were extracted from the subsoil;
• drainage groundwater not included in the state balance of mineral reserves recovered during the development of mineral deposits or during the construction and operation of underground structures;
• coal bed methane.

The key concept for calculating mineral extraction tax is "extracted minerals". The legislator connects the fact of mining with the occurrence of the obligation to pay mineral extraction tax. However, mineral raw materials undergo changes in the mining process. For example, ores in the bowels lie in the form of a massif; after an explosion of the massif, pieces of ore are separated (extracted from the bowels of the earth) and transported for processing; during processing, the ore is crushed and ground. All these are different states of one and the same substance, but only one of them is recognized as extracted minerals. Thus, for proper taxation, the answers to two related questions become important: what state of mineral raw materials is mined minerals and at what point in production ends. Article 337 of the Tax Code of the Russian Federation gives the following definitions of extracted minerals:

1. <...> At the same time, mineral products are recognized as products of the mining industry and quarrying (unless otherwise provided by paragraph 3 of this article) contained in the mineral raw materials (rock, liquid, and actually extracted (extracted) from the subsoil (waste, losses) other mixture), the first in its quality complying with the national standard, regional standard, international standard, and in the absence of these standards for a particular mineral extracted - the organization’s standard. 3. Mineral products are also recognized as products resulting from field development obtained from mineral raw materials using processing technologies that are special types of mining operations (in particular, underground gasification and leaching, dredging and hydraulic development of placer deposits, downhole hydraulic production), as well as processing technologies classified in accordance with the license for the use of subsoil as special types of mining operations (in particular, mining from overburden rocks or tailings, oil recovery from oil spills using special facilities).

In paragraph 1 of Article 337 of the Tax Code of the Russian Federation, a general definition of the mined mineral is given, and in paragraph 3 - a special definition used in special cases. The general definition indicates 3 features of a mined mineral:

• these are products of the mining industry (compliance with this criterion is checked by the Classifier of activities (for example, OK 029-2014 (NACE Rev. 2)
• it is contained in mineral raw materials extracted from the subsoil (this attribute sets the minimum volume of operations to which the extracted mineral must be subjected - it must be separated from the massif, that is, from the subsoil)
• this is the first product for which a standard is provided (this attribute sets the maximum volume of operations to which the extracted mineral must be subjected).

To illustrate, consider an example with limestone, which is mined from a quarry and processed into crushed stone at a crushing plant. The All-Russian product classifier by economic activity (OK 034-2014 (CPA 2008)) includes both limestone and crushed stone in the section “08 Other mining products”, that is, it is impossible to determine which of the substances under consideration by the first criterion alone minerals. And the limestone chipped in the quarry, and even more so the rubble, which is fragmented limestone, also meet the second criterion. There are national standards for limestone and crushed stone (limestone is GOST 31436-2011 "Rock mountain rocks for the production of crushed stone for construction work. Technical requirements and test methods"), but limestone is the first product in the production cycle that complies with the standard, which means that it should be recognized as mined minerals. That is, mining ends when limestone is received, and its crushing will be processing, which, as a general rule, is never carried out together with mining.

There are situations when the general definition of a mined mineral is not applied. In all such situations, there is a combination of mining and processing operations in a single process. For example, useful ore components are dissolved and pumped out through the wells or dredge scoops up the rock and processes it into concentrate. And one of these cases is the extraction of minerals from overburden rocks. Overburden, which is represented by rocks, can be processed into crushed stone, and then crushed stone (and not overburden) will be recognized as extracted minerals, but provided that such processing is classified in accordance with the license for the use of subsoil as special types of mining operations. Such attribution in practice is expressed in the fact that the appendix to the license indicates that the subsoil user produces crushed stone from overburden rocks.

In addition to the definitions of the extracted mineral, article 337 of the Tax Code of the Russian Federation provides a list of types of minerals, divided into groups. This separation solves 2 problems:

• allows the legislator in some cases to clarify what state of the mineral raw material is mined minerals (for example, for metals it is indicated that these are commodity ores and not concentrates; for gold, on the contrary, it is indicated that concentrates can also be mined)
• allows you to set tax rates immediately for entire groups

The tax base is the cost of extracted minerals (for all minerals, except oil, natural gas, gas condensate, coal and multicomponent ores mined in the Krasnoyarsk Territory). For oil, natural gas, gas condensate, coal and multicomponent ores mined in the Krasnoyarsk Territory, the tax base is the amount of extracted minerals.

The amount of extracted minerals is most often determined either by the direct (through the use of measuring tools and devices) method, or indirectly (calculated according to the content of the extracted mineral in mineral raw materials extracted from the bowels (waste, losses)) by the method. The method used by the taxpayer to determine the amount of extracted minerals is subject to approval in the taxpayer's accounting policy for tax purposes and is used by the taxpayer throughout the entire mineral extraction activity. The method for determining the amount of extracted minerals , approved by the taxpayer, is subject to change only if changes are made to the technical design for the development of a mineral deposit in connection with a change in the technology used for the extraction of mineral resources . In practice, taxpayers are often mistaken in the chosen method. For example, in ore mining, scales can measure not the ore itself, but the product of its redistribution. This method of determining the amount of mineral is more correctly called indirect, although it is often referred to as direct only on the basis that a measuring device was used to determine it.

The tax base is determined separately for each type of extracted mineral .

The valuation of the extracted minerals is determined by the taxpayer independently.

In 2012, legal uncertainty arose, which is the tax base for gas condensate . The Ministry of Finance of the Russian Federation clarified that the tax base for condensate from 2012 should be determined as its quantity ^[1] .

Chapter 26 of the Tax Code sets different tax rates depending on the type of mineral. Thus, taxation is carried out at a rate of 3.8% for the extraction of potassium salts; 4.0% - peat, oil shale, apatite and phosphorite ores; 4.8% - ferrous metal ores; 5.5% - raw materials of radioactive metals, natural and pure sodium chloride salts, underground industrial and thermal waters, bauxites; 6.0% - non-metallic mining raw materials; 6.5% - concentrates and other intermediates containing precious metals (excluding gold); 7.5% - mineral water; 8.0% - ores of non-ferrous and rare metals, natural diamonds and other precious and semiprecious stones; 16.5% - hydrocarbon feedstock. In the extraction of certain minerals, the rate of 0% is set.

Rates are of two types: solid (for oil , gas , gas condensate and coal , as well as multicomponent ores mined in the Krasnoyarsk Territory) and ad valorem (for all other minerals). For rates for oil, gas, coal, ores of ferrous metals, reduction factors are provided that apply when taxpayers fulfill the conditions stipulated in the Tax Code of the Russian Federation .

There is a correlation between the type of rate and the method of determining the tax base to which this rate should apply. Firm rates apply to the tax base, expressed as the amount of mineral extracted. Ad valorem rates apply to the tax base, expressed in the value of the extracted mineral.

In 2012, there was a problem of discrepancy between the tax rate and the tax base for gas condensate.

From January 1, 2012, the previously ad valorem rate of 17.5 percent for gas condensate was replaced by a fixed rate of 556 rubles (for the period from January 1 to December 31, 2012 inclusive), 590 rubles (for the period from January 1 to December 31, 2013 inclusive), 647 rubles (starting from January 1, 2014) per 1 ton of gas condensate extracted from all types of hydrocarbon deposits. However, the tax base both before 2012 and in 2012, in accordance with Article 338 of the Tax Code of the Russian Federation, was determined as the value of the extracted gas condensate.

On November 29, 2012, Federal Law No. 204-FZ of November 29, 2012, “On Amending Chapter 26 of Part Two of the Tax Code of the Russian Federation” ^[2] , which corrected the above discrepancy, was published. In this case, retroactive force was given to the law.

The issue of discrepancy between the tax rate and the tax base for gas condensate in 2012 was the subject of litigation. On July 16, 2013, the Constitutional Court of the Russian Federation in determination No. 1173-O indicated that this situation does not violate the Constitution of the Russian Federation. The issue of disagreement must be resolved by the arbitration courts by interpretation.

Formally, Chapter 26 of the Tax Code does not use the term “tax credit”. However, from an economic point of view, these should include zero rates, decreasing ratios, tax deductions, as well as exceptions to the object of taxation established in Article 336 of the Tax Code of the Russian Federation.

MET tax deductions are provided for coal (mined after April 1, 2011) and oil mined after January 1, 2012 in subsoil areas located in whole or in part within the borders of the Republic of Tatarstan or the Republic of Bashkortostan.

Decreasing ratios adjust basic tax rates. The coefficients are provided primarily for oil (and for oil there are both decreasing coefficients - Kv, Kz, and increasing - Kts). For independent (from Gazprom) gas condensate producers, a reduction factor is also provided. In addition to the above, the Tax Code of the Russian Federation provides for a decreasing coefficient of 0.7 for all types of minerals, but it does not have wide application in view of the impossibility of fulfilling the conditions for its receipt for most subsoil users.

Exceptions to the taxable object differ from rate 0 in that subsoil users who mine minerals that are excluded from the taxable object are not required to report on them to the tax authorities. For example, coal mines are not required to report on coal bed methane , which they mine along with coal. If coal seam methane would be taxed at a rate of 0, then the coal mining companies would not pay mineral extraction tax from it anyway, but they would be obliged to keep records of the extraction of this mineral and report on it to the tax authorities.

• S. Yu. Shapovalov. "Complex cases of calculating mineral extraction tax in the extraction of gold, uranium and multicomponent ores" - M: "UK Shapovalov Petrov", 2018
• S. Yu. Shapovalov. “Taxation of TRIZ mining: Commentary on Article 342.2 of the Tax Code of the Russian Federation and certain related provisions” - M: “Tax Aid”, 2015
• S. Yu. Shapovalov. Payment of mineral extraction tax in the extraction of precious metals. - M: "Tax assistance", 2014 - ISBN 978-5-9900-1433-6 .
• S. Yu. Shapovalov. Commentary to the Federal Law of December 28, 2010 No. 425-ФЗ “On Amending Chapters 25 and 26 of Part Two of the Tax Code of the Russian Federation”. - M: PravoTEK, 2011.
• S. Yu. Shapovalov. Payment of mineral extraction tax during oil and gas production. - M: "Tax assistance", 2010 - ISBN 5-9900-1432-5 .
• L.P. Pavlova, M.M. Yumaev. Taxation of solid minerals: practice and prospects. - M., 2010.
• S. Yu. Shapovalov, M.M. Yumaev. Payment of mineral extraction tax in the extraction of solid minerals and groundwater. - M.: “Tax assistance”, 2009.
• M.M. Yumaev. Payments for the use of natural resources. - M., 2005. - ISBN 5-1727-0086-2 .