Ukraine moves closer to cutting gas production tax

Ukraine moves closer to cutting gas production tax



7 жовтня 2015 года
Конкорд Капитал

Ukraine’s parliament approved on Oct. 6 the first reading of a bill #2835 that cuts the natural gas production royalty for private producers to 29% of the gas price from 55%. For those producing gas from deep wells (over 5000m), the royalty rate will decrease to 14% from 28%. The draft law was initiated by MP Yulia Tymoshenko and also reduces the royalty rate for gas produced by state companies to 29% from 70%. The draft stipulates that it will take effect after its publishing, or after the Rada approves it in the second reading and the president signs it.

An alternative bill, #2352a, prepared and updated by Cabinet of Ministers, was not supported by the Rada. This draft also cuts the gas production royalty (by 29%, and 14% for deep wells). This royalty would have been valid between Oct. 1, 2015 and Dec. 31, 2017. Starting 2018, the draft law introduces a 20% (10%) royalty and additional tax of 15% that will be paid on gas company’s revenue less CapEx.

Alexander Paraschiy: The preliminary approval of a tax-cutting initiative is encouraging for domestic private gas producers, inducing JKX Oil & Gas (JKX LN), Serinus Energy (SEN PW) and Regal Petroleum (RPT LN). At the same time, Tymoshenko’s draft looks inferior to the Cabinet’s version, which stipulates lowered taxes as of Oct. 1 (as was earlier agreed upon with the IMF). Instead, Tymoshenko’s initiative effectively postpones the tax cut. Secondly, unlike Tymoshenko’s draft, the Cabinet’s document, significantly amended from the first version presented in mid-July, offers tax stimuli starting 2018 for those investing a lot in gas field development.

Источник: Конкорд Капитал

Аналитик: Александр Паращий
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