Gazprom Facing Massive Tax Hikes

Gazprom is facing massive tax hikes as the Russian government seeks to raise revenues through a number of sources after increased spending in the run up to elections.

The proposed increases would almost totally negate any increased revenue raised by Gazprom through a rise in tariffs.

BNE reports that the tax would take between 80 and 100 per cent of the increased profits raised by Gazprom since the tariffs were raised. Russian newspaper Vedomosti has reported that Gazprom may seek to pass any such rise in taxes off to domestic industrial customers.

The tax on the company, which had historically been kept low, could be extremely costly for the company. On Monday, Bloomberg reported that the tax increases proposed could cost Gazprom up to 650 billion rubles or $22 billion a year.

Traditionally, Gazprom has kept its prices to its domestic customers low, lower than that offered to its foreign customers.

However, it is now seeking to implement a massive price hike to domestic customers in response to the proposed tax. Reuters reports that the company is now seeking a 26.3 per cent increase in gas prices to customers to take effect from October 1st of this year. This is in addition to an existing increase already planned, a 15 per cent increase which is due to take effect from the 1st of June 2012.

Gazprom has so far declined to comment on the proposed changes or on the report which raised the prospect of tax increases.