Belarus is concerned about potential losses from Russia’s tax manoeuvre

The Belarusian authorities have assessed the potential economic losses from Russia’s tax manoeuvre at USD 1 billion. Russia has not yet made a decision, but is considering various options, inter alia, increasing the tax on minerals extraction while reducing export duties on petroleum products, which will lead to higher oil prices on the domestic market and may reduce refineries’ profits, including Belarusian ones. In the event that Russia adopts tax changes, she might envisage a re-compensation mechanism, for example, partially or completely abandon the transfer of duties to the Russian budget. That, in turn, will require Belarus to revise her 2015 budget. In addition, Russia may allocate additional credit resources at a good discount to compensate for higher oil prices for Belarus. Russia may also revise the share of customer-owned oil refining in Belarus and increase refining costs for Russian companies. Russia may postpone implementation of the tax manoeuvre indefinitely, if so, Belarus will withdraw her claims.