It is not a secret for anyone that one of the leading branches of the Kazakhstan economy is the oil and gas sector. Kazakhstan is among the most promising oil and gas regions and today it occupies one of the leading places in the world in terms of oil reserves (12th place in the world, 1.8% of world reserves). The oil and gas industry is one of the main drivers of economic growth in the country, thereby reflecting the substantial dependence of the economy on the income of the industry. Thus, in 2013 and 2014, oil and gas exports reached a record high of 70% of the country's total exports (about 60% in 2017).
Given the importance and significance of the oil and gas sector, it is interesting to know how the revenues from the sale of oil are distributed.
The profits from oil exports from Kazakhstan are received in two ways: tax payments, including special payments by subsoil users (redirected to the National Fund of Kazakhstan), and in the form of export customs duty on crude oil and goods derived from oil (to the republican budget).
The receipts in the NF RK consist of the following sources:
· direct taxes from oil enterprises:
· corporate income tax (39% of revenue in 2017);
· mineral extraction tax (31%);
· the share of Kazakhstan in the division of products for concluded contracts (14%);
· rent tax on export (13%);
· excess profits tax, other types of taxes (3%);
· bonuses (0.3%);
· investment income from the management of the NF RK;
· other revenues from operations carried out by oil sector enterprises;• other income not related to the above items.
The main share of revenues to the National Fund comes from direct taxes from enterprises of the oil sector. In addition, each individual type of tax sent to the NF RK has its own characteristics in terms of the rates assigned and the terms of payment according to the Tax Code of the RK.
It should be noted that the legal framework for tax revenue is subject to change. In the Tax Code of 2018, in order to stimulate the development of marine and ultra-deep hydrocarbon deposits, a new type of tax was introduced - an alternative tax. This tax is not additional, as it represents the ability of the subsoil user to alternatively fulfil its tax obligations on a number of special payments and taxes of subsoil users (instead of the mineral extraction tax (hereinafter referred to as MET), historical costs, rental tax and excess profit tax.
An alternative tax on subsoil use is defined similarly to CIT as the difference between revenue and deductions, with the exception of remuneration expenses that are not deductible. The rate on it is set additionally to the CIT and is calculated depending on the world oil prices (up to $50 per barrel - 0%, above $90 per barrel and higher - 30%). Also from 2019, the commercial discovery bonus is cancelled, which, according to experts at Deloitte and PwC, was done to stimulate intelligence. According to the old tax code, the payment of this bonus was mandatory immediately after the discovery of commercial mineral reserves, which, in conditions of low oil prices, was a deterrent to reconnaissance.
The list of enterprises in the oil sector, the tax revenues listed above are credited to the National Fund, are annually approved by a joint order of the Ministries of Finance and Economy of Kazakhstan. For 2018, the list is presented by 152 organisations.
The main taxpayer in the oil industry is Tengizchevroil, whose tax payments in 2017 amounted to 1.13 trillion. tenge. The total share of taxes attributable to other companies is much lower.
Revenues to the state budget. Export customs duty for crude oil and products derived from oil is the only tax in the oil and gas industry, through which the republican budget is replenished.
From March 1, 2016, a progressive scale is used to calculate the ECD. The main goal of this approach is to alleviate the tax burden on the subsoil-exporters of Kazakh oil. In the course of a month, one of the export customs duty rates provided for in the Rules is applied to exported crude oil.
For the first time, the export customs duty was introduced in May 2008 and was valid until January 2009. Its size ranged from 109.91 to 203.8 US dollar per tonne. The abolition of export customs duties in January 2009 was associated with a fall in world oil prices.
In connection with the “stabilisation of oil prices”, the ECD rate from August 2010 was $20 per tonne, in 2011 - $40, in 2013 - $60, in 2014 - $80, in 2015 - $60, and from January 1, 2016 - 40 dollar per tonne.
According to the approved Rules, the customs duty rate is used per 1 tonne, depending on the value of the average market price for oil for the previous period.
The ECD rate scale starts from an average market price of $25 and comes to a price of $185 per barrel and above (the maximum rate is $236 per tonne of oil).
Rates of export customs duties on goods produced from oil are calculated quarterly based on the arithmetic average of the average market prices of crude oil for three calendar months. The calculation is made in US dollar per tonne, taking into account the correction factors. According to the methodology, the market price of crude oil is subtracted from the arithmetic average of average market prices, below which export customs duties are not charged at 187.5 dollar per ton (about $25.5 per barrel, 1 barrel ≈ 0, 1364 tonnes of oil).
In the first half of 2018, revenues to the state budget from ECD increased by 17%, while oil prices rose by 35%. It should be noted that this is the maximum rate since 2011 (Figure 2).
In general, the proceeds from the oil sector mainly go to the National Fund of Kazakhstan, which plays an important role in the country's economy. The assets of the National Fund, along with the gold and foreign exchange reserves of the National Bank, are a cushion of economic security and serve as a guarantor of macroeconomic stability in the country. A certain part of the proceeds from the oil sector falls into the republican budget in the form of customs duties. In addition, guaranteed transfers are allocated annually from the National Fund to the republican budget, the amounts of which are determined by the Concept of the formation and use of the National Fund. Thus, the budget’s dependence on oil revenues is high. At the same time, the Government is taking measures to diversify the country's economy as part of reducing dependence on oil revenues.
Reported by Kapital (Kazakhstan).
