Russian gov considers preferential tax for export into "friendly" countries

18 Jul 2023 | Masha Belikova

The Russian government is working on amendments to its export policy that would allow a temporary reduction or even the elimination of export taxes for products heading to a list of countries deemed to be 'friendly', Russian local media outlet RBC has reported, citing a government document it has seen.

The proposed amendment would still need to be formally approved at a meeting of the Cabinet of Ministers, after which it can be submitted to the State Duma - but details have not been made available in the public domain.

This change was done in accordance with instructions from the Russian president, who has ordered the amendments in a bid to promote economic development and strengthen ties with countries whose trade and political relationships will elevate them to “most favored nation” status, to the exclusion of other countries.

As such, export taxes for grains and vegetable oils, along with other commodities Russia typically exports, could be lowered from the current official levels, or even zeroed for the period of up to half a year.

According to an explanatory note, quoted by the news agency, such preferential tariffs could be used for export to friendly countries - that is, those countries that have not imposed sanctions against Russia after its invasion of Ukraine, or countries with which Russia is currently building strategic, economic or political relations.

It was not immediately clear how this new proposal could affect the grain and oils markets and what impact it could have on the local and international prices for grains and vegetable oils.

Especially, as almost all grain and oils exports from Russia goes towards countries that are friendly to Russia or have been neutral on the invasion, with very little share taken by European buyers who are now considered unfriendly.

Russia's biggest export destinations for agricultural products in 2022/23 have been Turkey, Egypt, Iran, and Saudi Arabia.