INSTITUTIONAL ASPECTS OF TAX REGULATION OF ARCTIC OIL AND GAS PROJECTS

Abstract

The article presents the issues of tax regulation connected to the implementation of oil and gas projects in the Arctic region of Russia. Over the past decades, revenue from oil and gas have dominated the state budget and, as a following, the country’s economy. Fiscal policy has evidently become one of the main regulators of support and development of this industry. Currently, the mineral extraction tax, export duty and additional income tax have become the main types of payments for the use of subsoil. Current trends of exploration and development of deposits have shifted towards the seas and oceans of the Arctic basin and facing new technical and legislative challenges. Significant differences in the conditions for the development of “Arctic” and “traditional” fields require a differentiated approach to tax regulation, in order to stimulate investment activity in the Arctic and improve the efficiency of oil and gas projects in the region. The study is built on elements of a functionalist institutional approach to the formation of tax relations and regulations between the state and businesses, representing the main Arctic players. The functionalist approach assumes that institutions reflect the interests of their creators. Any change in interests or conditions leads to the transformation of the institution, as evidenced by the permanent change in the rules of tax regulation in the fields of production and realization of oil and gas products. The purpose of the study was to monitor the tax regulation related to the development of the oil and gas business in the Arctic, which ensures the formation of a cargo base and an increase in the load on the Northern Sea Route. The first part of the study is devoted to the definition of special conditions for the implementation of projects in the Arctic region which determine the need for special tax regulation. The second part of the discussion considers the transformation of tax regulation of Arctic oil and gas projects in terms of mineral extraction tax and export duty. The study allows us to conclude that the state, being one of the key stakeholders, introduces tax incentives and creates favorable conditions for companies, taking on the risks of losing tax revenue. However, this approach opens up access to the oil and gas reserves of the Arctic region, the extraction of which was previously economically inefficient.

Keywords

• region
• arctic
• taxes
• oil and gas business
• northern sea route