Russia will consider shifting the tax burden for high cost off shore oil drilling from taxes on revenues to taxes on profits to encourage development of the Arctic.

Mr Sergei Shatalov deputy finance minister of Russia said that "Regarding the development of off shore, especially in the Arctic there we are thinking of taking more vigorous steps forward. The idea is to support those companies that are prepared to operate off shore and the taxation system will be based on taxing the profit.”

Mr Shatalov said that because of the relatively high cost of drilling off shore, companies complain that taxes that hit revenues rather than profits make it unattractive. The taxation system should be changed in a way so that it reduces taxes related to income but at the same time raises those taxes that are related to export profits. Designing such a system would be complicated.

(Sourced from Reuters)