UNIAN
Ministry of Energy and Coal Industry of Ukraine has initiated a reduction in rents for oil and gas companies from the current level of 55% to 35%, the minister stated at a briefing in Kyiv.
It is expected that such move will stimulate energy production and attract more investment into the sector, according to the Ministry of Energy and Coal Industry of Ukraine Volodymyr Demchyshyn.
As UNIAN reported earlier, at the end of December 2014, the Verkhovna Rada of Ukraine adopted the law on amendments to the Tax Code of Ukraine, according to which the increased taxation of private oil and gas companies was introduced on a permanent basis and not as originally planned - for a year. In particular, 45% as regards of oil extraction at depth of up to 5 km, and 21% at more than 5 km. For natural gas, which is not sold for the needs of the population the rent is 55% when extracted at depth of up to 5 km, and 28% at more than 5 km.
For companies engaged in the production of hydrocarbons under joint operating agreements, the rent is as follows, regardless of the depth of extraction: in the 1st quarter of 2015 - 60%; in the 2nd quarter - 65%; and in the 3rd quarter - 70%.
A number of private gas companies listed on European stock exchanges has repeatedly requested Ukraine to revise its investment program following the approval of government’s tax initiatives, which is said to lead to a decrease in drilling operations in 2015 and a drop in natural gas production
In March, the Ministry of Finance and Ministry of Energy formed a working group that was instructed to develop a better mechanism for determining the level of rents.