Privatization of “Rosneft” suggested to spend without paying tax

The office of “Rosneft” in Moscow

Photo: Nikita Popov/RBC

Privatization Of “Rosneft”

The government lifted restrictions on the sales price of the package of “Rosneft”
11:44

The former head of the energy Ministry proposed to transfer part of the shares of “Rosneft” management
3 Nov, 12:21

16 materials

“Rosneftegaz” can be exempt from tax on profits from the sale of 19.5% of Rosneft shares. This will happen if they adopted the relevant amendments to the Tax code that was read by RBC

State “Rosneftegaz”, which have until 5 December 2016 to implement almost a fifth of Rosneft, may be exempt from paying tax on the results of this transaction. In this case, Rosneftegaz can save on tax more than 100 billion rubles, show the RBC calculations made with the help of experts.

On 7 November, the Ministry of Finance issued at the meeting of the government Commission on legislative activities draft government amendments to the bill on amendments to the Tax code, which the state Duma adopted in the first reading earlier this month. RBC got acquainted with the copy of the amendments. As follows from the document, the Finance Ministry proposes to amend article 251 of the Tax code (“Income not taken into account in determining the tax base”) to include revenues, “received a joint stock company, 100% shares of which belong to the Russian Federation from the sale of shares of other organizations, under condition of transfer of such proceeds in full to the Federal budget.” Under such an amendment is potentially subject to Rosneftegaz, 100% of which is owned by the government and which is preparing to sell a 19.5% stake in Rosneft.

The press service of the Ministry of Finance and the press service of “Rosneftegaz” on Monday night did not respond to a request RBC.

“Standard, such transactions are subject to income tax on the principle of “income minus expenses”. In this part, such income is called “capital gains” (capital gain), it is taxable,” says Evgeny Timofeev, partner and head of tax practice for Russia and the CIS law firm Goltsblat BLP. Such transactions are taxed on the profits as General of a securities transaction confirms the head of practice of tax disputes “MEF-Audit” Alexander Ovesnov.

We are talking about amendments to the second reading of the government bill, which was introduced in the state Duma on 20 October and 2 November adopted on first reading. Amendments must be submitted to the state Duma until 18:00 GMT on 8 November, follows from the bills of the lower house of Parliament.

Two members of the state Commission on legislative activities confirmed RBC that the amendments were discussed at the Commission meeting on 7 November. They were not included in the original agenda, say both sources, which caused controversy at the Commission. “49 pages amendment no one had time to study,” says one of the interlocutors RBC.

In the end, the Commission decided that the comments to the amendments will be presented to the Duma, said the source of RBC, and the amendment will be there in time, that is Tuesday night.

Answering questions of journalists on Monday, Chairman of the Duma Committee on budget and taxes Andrey Makarov did not predict the time frame in which to complete the preparation of the tax bill for the second reading.

One of the interlocutors RBC in the Commission notices that this amendment, which exempts 100 percent of state-owned companies from paying profit tax when selling shares to another company, was not discussed at the Commission separately. This is confirmed by another source who attended the meeting. They both do not exclude that under the amendment may be subject to “Rosneftegaz”.

If the shares are on the balance sheet of the company, when determining the amount of the tax expenditure must be accounted for on the basis of historical evaluation of cost when making a package on balance, says Timofeev of Goltsblat. In 2005, 100% of shares of “Rosneft” was transferred to “Rosneftegaz” in the property at the carrying value of 734,2 billion rubles, follows from the report of “Rosneftegaz” for 2005. Now, according to government plans, Rosneftegaz should sell 2,067 billion of Rosneft’s shares over 711 billion rubles on the Basis of historical cost of this package was estimated at about 150 billion rubles. This means that the taxable base for the profit tax will exceed 500 billion rubles, and the tax will be more than 100 billion.

In 2006, Rosneftegaz paid to the budget the profit tax when selling a 12% stake of Rosneft in its IPO. Tax amounted to 33.1 billion rubles, at that time the rate of profit tax was 24%, follows from the reporting “Rosneftegaz” for that year.

This year it is expected that from the sale of 19.5% of Rosneft shares, the budget will receive nearly 711 billion rubles, follows from the statements of the Minister of economic development Alexei Ulyukayev, circulated 7 November, the press service of the Ministry of economic development. “No later than December 5, 2016, the transaction must be closed no later than 31 December 2016, the money should be transferred to the budget of the Russian Federation in the form of dividends of “Rosneftegaz”, — said Ulyukayev.

Earlier, on 7 November it became known that the government on 3 November passed a resolution that establishes the approaches to the contract price for the sale of a package of 19.5% of “Rosneft”. The document cancels the previous order, which established that the price of actions “Rosneft” can not be below market, defined on the basis of the evaluation report the market value of the shares prepared by an independent valuer, not below the price of the company’s IPO in 2006. The new order has the minimum price is determined on the basis of quotations, which were identified on 11 October 2016, Ulyukayev said. In determining rates will be applied a factor of 0.95.

“In the figures is as follows: 748,26 bn, multiplied by a factor of 0.95, which includes in accordance with normal market practice, the minimum discount (5%). In order to state the exact number of shares equal to 19.5% of the total share capital of the company”, — said the Minister. Earlier, Ulyukayev said in an interview with Reuters said that 19.5% of the shares can redeem itself “Rosneft”, but the Ministry of economic development considers this opportunity as a “transit operation”.

With the participation of Timothy Dzyadko, Svetlana Bocharova, Ivan Tkachev

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