Business news

10 Jan 2019

Belarus government told to explore tax maneuver compensation options in cooperation with Russia

MINSK, 10 January (BelTA) – Belarus President Alexander Lukashenko has instructed the government to compensate for the losses the country’s budget has incurred due to the new taxation scheme in the Russian oil industry in any avenues of Belarus’ cooperation with Russia. The head of state set the task during the government conference held on 10 January to discuss the country’s social and economic development in 2019 and approaches to further integration work, BelTA has learned.

Alexander Lukashenko mentioned results of negotiations with President of Russia Vladimir Putin in late December. In particular, the sides discussed what compensation Belarus may receive due to the so-called tax maneuver in the Russian oil industry. “There was no rejection with regard to the compensation. Russia did not say it would not compensate for our losses. Moreover, the president of Russia suggested continuing negotiations on this matter this year and working out an acceptable solution via one-on-one talks and within the framework of working groups,” said the head of state.

Alexander Lukashenko remarked that the problem was supposed to have been resolved by 1 January but the failure to get it done is no catastrophe. “Belarus’ losses due to the tax maneuver will be a laughable sum this year: about $400 million with the oil priced at $70 per barrel. It is no catastrophe. But we cannot accept it because we’ve already lost $3.6 billion since 2015 when the tax maneuver was introduced. We will lose $10.6 billion by 2025 before the tax maneuver is over,” said the president.

“We cannot afford losing as much as last year. This is why all the losses must be compensated via various avenues of cooperation with the Russian Federation,” Alexander Lukashenko told the government. “I said it to the president [of Russia] regardless of how painful and sorrowful it can be and I repeat it publicly for you as an instruction from the president of Belarus. You will have to carry it out flawlessly and precisely. We cannot afford losing anything.”

The head of state pointed out that actions of the Russian side contradict the spirit and the letter of all the agreements, including within the framework of the Eurasian Economic Union. “Some people in Russia say that they have no obligations to compensate anything, that nothing like that is written in union treaties. Let me ask a question plainly: When we were signing these agreements (on the Union State of Belarus and Russia, the Eurasian Economic Union), did we expect the economic situation to get worse all the time due to some domestic actions of the Russian Federation? We didn’t. We expected things to get better,” said Alexander Lukashenko.

The president went on saying that tax maneuvers were not a thing back then. The sides could not have incorporated such a possibility into the agreements because they did not think such things could come to be. The general wording was to prevent the relations from getting worse, noted Alexander Lukashenko.

Negotiations on compensations for Belarus have already been held previously, with the relevant mechanisms worked out and sources determined. Representatives of Russia publicly stated the problem had been resolved in a positive manner for Belarus. However, Alexander Lukashenko reminded, the Russian side abruptly halted the negotiations soon after that without rejecting the idea of compensations while simultaneously stating the need to take the integration processes to the next level.

“Russians have yet to answer the question of what those integration processes are. When I asked them to say what the Russian Federation wants from Belarus today with regard to integration, I didn’t get a straight answer. Upon the proposal of the Russian Federation we agreed that these questions should be determined and working groups should try to address them,” said the head of state.

Such working groups were set up in late 2018. The Russian side is represented by Russian Economic Development Minister Maksim Oreshkin while the Belarusian one by Economy Minister Dmitry Krutoi.

“I am absolutely in favor of the proposals stating these groups need officials of the highest caliber instead of specialists only. We should negotiate a complex of matters mentioned by the union treaty. We should focus on – as the Russian president suggested – economic and financial issues first and foremost,” pointed out the head of state. The president stressed that decisions on all the issues had been made a long time ago, yet, according to Alexander Lukashenko, the Russian government had simply forgotten to inform the Russian leader about it.