As from January 1, 2023, Lukoil Neftochim Burgas and Lukoil Bulgaria will move their business, revenues and taxes to Bulgaria from the Netherlands and Switzerland, Bulgarian Deputy Prime Minister for Economic Policies and Transport and Communications Minister Hristo Aleksiev told a news briefing here on Monday.
Together with Economy and Industry Minister Nikola Stoyanov and Deputy Finance Minister Lyudmila Petkova, Aleksiev conferred with Chairman of the Management Board of Lukoil Neftochim Burgas AD Management Board Chairman Ilshat Sharafutdinov and with Lukoil Bulgaria General Manager Andrey Matiukhov and Lukoil Bulgaria legal consultant Alexander Velichkov.
It transpired from the news briefing that the company had agreed to start paying its taxes in Bulgaria on condition that it is allowed to keep processing predominantly Russian oil and export its petroleum products.
Last year Lukoil Neftochim Burgas paid BGN 3.5 million in taxes to the Bulgarian public purse. The profits tax payment by the company is expected at BGN 100 million this year and BGN 600-700 million next year, said Aleksiev.
"This step makes it possible for Bulgaria to increase its tax revenues," said Economy Minister Stoyanov.
At present, Lukoil pays a minimum profits tax in Bulgaria because the profit is transferred to its parent company Litasco, which is registered in Switzerland.
The tax revenue in question will be generated by a 10% corporation tax on the refinery's actual profit and a 33% temporary solidarity contribution on the difference between the tax profit for 2022 and the so-called surplus profits (the arithmetic mean profit for the 2018-2021 period increased by 20%), Petkova explained.
"The additional budget revenue will be spent on fuel price compensations for individuals and businesses, for which the Government will take the necessary steps," the Deputy PM said. To this end, a programme for compensation of vulnerable social groups is being drawn up and will be proposed.
Sharafutdinov confirmed that the talks had been constructive. "In our opinion, it is fair that the taxes on the companies' activities should stay in Bulgaria. The Burgas plant has been operating under this scheme since 2020, so that the financial revenues could stay in Bulgaria. The economic reality then did not generate such surplus profits. After the change of the business scheme of the enterprise, we should realize the importance of keeping the present macro-economic conditions. Another important condition is that the plant make maximum use of Urals brand oil," the Lukoil Neftochim Burgas executive said.
"We have perused the European Commission directives on the import of Russian oil. The re-export of crude oil remains strictly forbidden, but the import of petroleum product is allowed," said Aleksiev. "These products are Bulgarian."
"This will help our foreign-trade balance, and we will turn into a fuel exporter from a fuel importer. This will boost our budget revenues, too. Bulgaria's fuel prices are the lowest in the EU, and they are also lower than the prices in Serbia and Greece," Aleksiev said. "We are taxing the difference between the price of Brent and Urals. There is nothing political about this decision, it is strictly economic, why not benefit from the derogation which the regular cabinet bargained," Aleksiev added.
"The new business scheme actually implies that the refinery buys the oil, processes it, and sells the petroleum products," Sharafutdinov said.
"The petroleum products derived from Urals oil will originate from Bulgaria and can be exported," said Petkova.
"This year Lukoil Neftochim Bulgaria will process a record large volume of oil: 6.6 million tonnes until December and 7.1 million tonnes until the end of the year. Some 50-55% of the output is exported, which means that the plant cannot operate if the export of petroleum products is restricted. If the restrictions are imposed, we contemplate a closure of the refinery. We fill our depots and we close down," said Sharafutdinov.
/LN/
news.modal.text
Nothing available