Novatek proposes zero VAT for icebreaker assistance during LNG transportation
© RIA Novosti. Valeriy Melnikov

Novatek proposes zero VAT for icebreaker assistance during LNG transportation

Novatek has proposed establishing zero VAT for icebreaker assistance during the transportation of LNG, CEO Leonid Mikhelson said.

"As was noted here, transportation accounts for a significant share in our LNG structure of costs in the end markets. Please consider the possibility of setting a zero rate of value added tax for icebreaker services. Since the LNG is exported, of course, its transportation is VAT-free, but icebreaker assistance is also used when it comes to exports. I don't think there should be any question about icebreaker services being VAT-free as well," Mikhelson said on April 15 at an off-site meeting of the Federation Council in Sabetta on the Yamal Peninsula.

Moreover, according to him, zero income tax could be an additional incentive to invest in R&D projects to develop LNG equipment. "It is also necessary and urgent (since we work with all the plants that are going to develop LNG equipment) to consider introducing zero income tax on the property being created, both for the manufacturers of LNG lines and for their suppliers," Mikhelson pointed out.

"The Tax Code provides for a property tax exemption for mining platforms. What we are working on now — liquefaction facilities on Gravity Based Structure (GBS) platforms — they are installed where there's an area of water, meaning they are also practically offshore structures. So we are asking you to exempt from taxes not only mining platforms, exempting them from the property tax, but also offshore processing platforms," the head of Novatek said.