More tax cuts in pipeline to help oil prices stabilise

Russia's oil industry is likely to benefit from more tax cuts in the near future, according to Finance Minister Alexey Kudrin. However, he doesn’t support the ministry’s plan to reduce Value Added Tax (VAT) as he thinks it will impair the country’s budget

The recent $US 4 billion of cuts in oil taxes announced by the Russian government was only the first step said Kudrin.

The Finance Minister also said there might be an advance in the development of energy saving technology that could further stabilise oil prices. But he declined to say what additional measures could be taken.

The Finance Ministry is considering the reducing the VAT rate to 12% by 2010 – the rate currently stands at 18%. Though some ministry officials consider the tax remission will pay for itself during the following four years, Kudrin has called the prospect “absolutely destructive”.

The minister is inclined to think the pay off demands a minimum of eight years.