Date: 14 June 2021

Rosneft Loses Customs Arbitration Case

The Moscow Arbitration Court dismissed the lawsuit that Russian oil giant Rosneft had brought to declare illegal a decision of the Federal Energy Customs Office to impose extra duties and penalties worth some 5.8 billion roubles.

SOURCE: TRANSNEFT.RU

The litigation occurred amid Rosneft’s abidance by the tax standard that has not yet entered into force. In January 2019, Rosneft declared some 1.2 million tons of crude oil under its deals with China National Petroleum Corporation (CNPC), inked in February 2009 and June 2013, and CEFC China Energy Company Limited (from September 2017), at a Moscow branch of the Federal Energy Customs Office. The flows of crude oil came from the oilfields of Yurubchenko-Tokhomskoye, Lodochny, Tagulsky, Kuyumbinskoye, and Severo-Komsomolskoye that were exploited by Sevkomnetegaz, Vostsibneftegaz, Tagulskoye, Samotlorneftegaz, and Slavneft-Krasnoyarskneftegaz. While submitting a customs registration, Rosneft declared a tax exemption. As the Federal Energy Customs Office ordered a customs control last spring, its officers said the exemption Rosneft had declared was not applicable. According to a letter from the Ministry of Finance dated March 19, 2019, a company that is a payer of additional income tax receives exemption from paying export duties only if the right to oil produced in the area belongs to that company as a user of the fields. The terms have been amended and extended to other persons from May 1, 2019, onwards. Since Rosneft is not a user of preferential oil fields and did not charge income tax on its production, the ownership of crude was transferred to it based on purchase and sale agreements concluded by Sevkomneftegaz, Vostsibneftegaz, Tagulskoye, Samotlorneftegaz, and Slavneft-Krasnoyarskneftegaz. The company submitted its customs declaration before May 1, 2019, and thus availed the tax relief unlawfully, according to the Federal Energy Customs Office. When the flows of oil came within the export customs procedure, it turned out that the oil giant had to pay an export duty of 5.3 billion roubles. According to the case files, Rosneft complied with the decision of the Federal Energy Customs Office and paid all duties and penalties worth 5.76 billion roubles. As the company refused the decision of the customs office, it submitted a complaint to the Federal Customs Service that was then dropped.

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