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Russian metals firms may face $1.4bn in extra tax, shares fall

31st May 2021

By: Reuters

  

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Russian metals producers may face a demand to pay 100-billion roubles ($1.4-billion) in additional tax to the government for 'screwing the state', First Deputy Prime Minister Andrei Belousov said in an interview with Russia's RBC TV.

Moscow has been keeping a close eye on rising raw materials costs in the construction sector as part of widespread attempts to keep domestic commodity prices stable even as they rise at a global level. It lifted taxes for metals firms in 2020.

This process coincides with the government seeking additional proceeds for its budget, and President Vladimir Putin's recent call for Russian metals exporters to invest more at home instead of paying high dividends.

Belousov said certain Russian metals producers, which he did not name, had turned in strong financial results recently.

"That is not a bad thing. And it is not even bad that they are paying dividends. The bad thing is that they all raised prices on the domestic market in line with growth in world prices," Belousov said.

"We have calculated that... metals producers have screwed us, the state, the budget, in terms of state investments and the state defence order by about 100-billion roubles. This money, I think, should be returned to us in the form of tax," he added.

Putin is aware of the issue, and the government is looking into it, Kremlin spokesman Dmitry Peskov told reporters on Monday.

"Prices have been very high and additional profits have been generated," Peskov said. "One should hardly look for culprits here, this is economic life - business earns money, the state receives taxes, and when an imbalance arises, the state evens out this imbalance."

Shares in Russian steel producers fell in Moscow on Monday. Severstal led the drop with 3.8% decline, also due to its ex-dividend date.

Russian steel producers will increase tax payments two-fold to 200-billion roubles in the first half of 2021 and will invest more in their industry, the association representing them said in a statement.

Edited by Reuters

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