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  • Mining taxation
    Mineral extraction tax

    Corporate entities and individual entrepreneurs engaged in mining are subject to mineral extraction tax (MET). The tax base is the value of the mineral resources extracted, based on their quantity, and either the sales price net of VAT, customs duties, and customs clearance fees (reduced by freight costs and refining costs) or the cost of production, as per the tax accounting records maintained for profits tax purposes.

    Generally, the cost of production measure is only applied if there are no sales. The value of precious metals recovered from natural deposits or spoil should be determined on the basis of the taxpayer's sales prices for chemically pure metals during the current month (or the preceding month in the absence of sales during the current month).

    If no sales of a particular mineral resource are made during a tax period, taxpayers should calculate the value of the extracted minerals based on their production costs. Certain rates of MET are shown in Table 9.


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    Export customs duties

    The rates of export duty for some types of mineral resources are provided in Table 10.


    VAT exemption

    Sales of precious metals by mining companies or companies producing such metals from scrap and waste to the State Funds for Precious Metals and Stones, the Central Bank of Russia (CBR) and authorized banks are subject to VAT at a rate of 0%. Input VAT relating to production is generally recoverable, assuming the conditions provided in the Tax Code for VAT recovery are satisfied. The recovery is usually accomplished by offsetting the input VAT against other taxes payable to the Federal budget.

    The tax legislation provides VAT exemption for the following transactions:

    - Sales of scrap and waste of ferrous and non-ferrous metals
    - Sales of ore, concentrates, other industrial products, and scrap and waste containing precious metals for the production of other precious metals
    - Sales of precious metals and precious stones by companies other than mining companies or companies that produce metals or stones to the State Funds of Precious Metals and Stones
    - Sales of precious metals and precious stones by the CBR and authorised banks
    - Sales of raw precious stones, excluding unprocessed diamonds, for processing and subsequent export sale
    - Sales of unprocessed diamonds to processing companies

    If a VAT exemption applies, the input VAT relating to the production cannot be recovered but is deductible as an expense.



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    Source: Deloitte


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