Putin doubles down on Transneft tax, slashing investments
The Kremlin is seeking additional ways to bolster the state budget, strained by the ongoing war in Ukraine. The lower house of Russia's parliament, the State Duma, passed a law on Tuesday raising the corporate tax on certain companies from 20% to 40%. Transneft has already announced that it will need to reduce its investments as a result.
Vladimir Putin is once again relying on state-owned companies to address the budget shortfall caused by the conflict in Ukraine. This time, he has mandated an increase in the profit tax for the state oil pipeline operator, Transneft.
According to "The Moscow Times," at the president's behest, the State Duma passed a law increasing Transneft's corporate tax rate from 20% to 40% for the years 2025 to 2030.
This significant financial burden could threaten the financial stability of the pipeline operator. The company noted that only a quarter of its profits would be available for internal use.
Immediately following the decision, Transneft announced that it would have to scale back its investments. This reduction will lead to decreased funding for the maintenance of oil pipelines, oil bases, and fuel tanks.
"After a thorough analysis of production, economic and geopolitical factors, experts predict an unavoidable and significant reduction in Transneft’s investment program by 2026," the company stated, as reported by "The Moscow Times."
The operator also warned of the "negative impact" on related sectors, particularly the fuel and energy sectors. As of December 6, Transneft announced a 13.8% increase in fees for the transport of petroleum products. It also proposed raising tariffs through 2030 to "ensure stable and reliable operation."
State-owned Transneft, which manages a pipeline network totaling approximately 41,631 miles, is responsible for transporting crude oil and fuels to sea terminals.
