August 25, 2018 / 1:00 PM / 10 months ago

Kremlin aide wants top firms to invest more rather than pay windfall tax

MOSCOW (Reuters) - Kremlin aide Andrei Belousov said on Friday he would like major Russian firms to invest in social projects rather than pay higher taxes, weeks after he proposed raising 500 billion rubles ($7.5 billion) a year from metal and mining firms.

Russian President Vladimir Putin's economic adviser Andrei Belousov walks at a meeting with major Russian firms representatives in Moscow, Russia August 24, 2018. REUTERS/Tatyana Makeyeva

President Vladimir Putin ordered the government to discuss Belousov’s proposal to levy a windfall tax. Putin has himself not taken a public stance on it, but the proposal triggered a sell-off in metal and mining shares.

Russia needs extra budget revenue to meet economic goals set out by Putin when he began a new six-year term in the Kremlin in May. The government has already announced plans to raise value-added tax from 2019 and increase the retirement age.

Speaking after government talks with business leaders on the proposals on Friday, Finance Minister Anton Siluanov said the tax burden on businesses would remain unchanged, in line with levels discussed and agreed earlier this year.

Siluanov and the economy and industry ministers have opposed a windfall tax.

Belousov, who also attended the meeting, said top firms have benefited from a weak rouble, which has been falling under pressure from new U.S. sanctions imposed in April.

These firms “understand that they have to support social projects without harming themselves, their employees and shareholders”, Belousov said.

He said the idea of “extracting” (revenues) from companies is now off the table, adding that firms should invest in “infrastructure, environmental issues, the cyber economy, and the creation of technologies”.

Asked about the amount of funds major firms could invest in such projects, Belousov said it would be a “very good achievement” if businesses could spend up to 200 billion or 300 billion rubles.

“The funds we discussed today ... will be invested by firms in projects they are interested in. The government will support, help and tell them which directions for investment are interesting,” Siluanov said.

Reporting by Anastasia Lyrchikova and Polina Nikolskaya; Writing by Denis Pinchuk; Editing by Dale Hudson

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