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Prime Minister Vladimir Putin chairs a meeting on taxation in the gas industry

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Vladimir Putin’s introductory remarks:

Good afternoon, ladies and gentleman,

We continue to prepare the budget for 2012, 2013 and 2014. Last week we examined issues related to the improvement of tax control over transfer pricing, and today we will discuss the taxation of the gas industry.

I would like to remind you that as of January 1 of this year we increased the mineral extraction tax for gas for the first time in five years – by 61%. The reason for this is the improvement in international market conditions: prices for oil and then gas started to rise on the international market. I mean, gas prices depend on the international prices for oil, the price formula for oil products. In this respect, I would like to say that we need to create the conditions that allow our tax system, our tax mechanism, to respond to shifting market dynamics promptly and in a most timely manner. This is very important, and at the same time I will point out the fact that the primary objectives for our gas companies deal with meeting the demands of the domestic market, developing the gas supply network across the Russian regions, including eastern Siberia and the Far East.

I would also like to remind you that while making the decision on increasing the mineral extraction tax for gas by 61% as of January 1, we agreed on maintaining a zero rate for districts lacking infrastructure, the districts known as hard-to-reach areas, and projects to create enterprises to produce liquefied natural gas (LNG).

Despite that, we see that our companies' revenues are growing, and naturally the question arises as to how we should proceed in this situation. At the same time, I would like to draw the attention of our colleagues to the fact that me must carefully weigh a decision on this and take the budget's needs into account. We must ensure that there are revenues to fulfill our social obligations, first and foremost, and develop other fields. But we also need to bear in mind the promising investment plans of our gas companies. This will guide our work in resolving the issue, which is the reason why we have all gathered here.