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Ukraine To Slash Tax On Oil, Gas Industry

by Tatiana Smolenskaya, Tax-News.com, Moscow

14 July 2015


Ukraine's Finance Minister, Natalie Jaresko, has announced plans for a substantial cut in royalties for oil and gas companies.

Jaresko was attending a US-Ukraine business conference in Washington DC when she announced the cuts as part of a strategy to woo US investment. She said that she had listened to industry representations that the existing royalty rates have stymied development.

Royalties on oil and gas would be roughly halved, taking the existing 55 percent rate on projects extracting oil and gas from less than 5,000 meters below the surface to 29 percent. The existing 29 percent rate, on deeper projects, would be cut to 14 percent rate. Further cuts, which would bring these rates to 20 percent and 10 percent, respectively, may be implemented next year.

A windfall tax may also be slapped on "very high profits."

The proposals, which would be effective from October, must first be approved by Parliament.

TAGS: tax | business | mining | royalties | fiscal policy | energy | oil and gas | extraction tax | tax rates | tax reform | Ukraine

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