16:02 01.10.2019

Initiative of retrospective change for gas royalty rates from new wells wrong – PM

2 min read
Initiative of retrospective change for gas royalty rates from new wells wrong – PM

The legislative initiative regarding the change of royalty rates for production of gas from new wells (bill No. 1210), envisaging the review of liabilities overtaken by Ukraine in part of incentive taxation of the gas production sector, is wrong and would result in the loss of trust of investors, according to Ukrainian Prime Minister Oleksiy Honcharuk.

"It is absolutely wrong to review the taxation conditions that were previously agreed upon. If the state agrees not to review the taxation for a certain period of time, and then acts on the contrary, it loses confidence of investors," he said on Monday night on ICTV channel.

At the same time, Honcharuk said that the initiative to change royalty rates for gas production is under discussion and should not be taken as an already adopted requirement of the law.

"Currently, a large number of different initiatives have been registered in the Verkhovna Rada. The government is not directly related to all of them. This requirement is still being debated, so I would not regard it as something that has already happened," the prime minister said expressing hope for finding a balanced solution of this issue.

As reported, at the end of 2017, the Verkhovna Rada made amendments to the Tax Code, providing for reduction to 6% and 12% of royalty rates for the production of natural gas from new wells (respectively, above 5 km and less than 5 km deep), guaranteeing investors that this taxation remains unchanged for five years.

At the end of summer, bill No. 1210 was introduced into parliament, which provides, inter alia, for canceling the rates of 6% and 12% for new wells, the construction of which is planned by a project for developing the subsoil field in order to maintain production.

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