How tax has changed its approach to rubble
According to the Tax Code, a mineral resource extracted from the subsoil in Russia is recognized as an object of the mineral extraction tax, recalls Artur Parfenchikov, noting that the procedure for calculating the mineral extraction tax on a building stone was in effect for 20 years. Now the tax authorities of Karelia insist that “the first production product is not building stone, but crushed stone.”
Producer prices for crushed stone in October 2021 were, according to Rosstat, 586 rubles. for 1 cubic meter m (excluding taxes), which is 4% more than in the same month last year. The average prices at which construction companies buy crushed stone have grown more: according to the latest available data for September, 1 cubic meter. m of crushed stone cost buyers almost 1.5 thousand rubles, 10% more than in September 2020.
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Rosstat does not publish prices for building stone. According to the vice-president of the National Non-Metallic Company Sergei Glebov, crushed stone is five to six times more expensive than building stone.
What is crushed stone for?
To obtain crushed stone, producers crush rocks, such as granite or gabbro-diabase. Crushed stone is used for the production of concrete and reinforced concrete – it increases the strength of these materials. It is also used for paving and the production of asphalt mixtures.
For nine months of 2021, the country produced, according to Rosstat estimates, almost 145 million cubic meters. m of crushed stone, which is 0.5% less than a year earlier.
Three companies pretend to be Russian Railways’ permanent contract for crushed stone
The Chelyabinsk and Sverdlovsk regions have become a kind of pilot regions, in which, since 2019, tax inspectorates have started to demand additional mineral extraction tax on crushed stone through the courts, Glebov points out. According to him, the courts side with the tax authorities, recognizing crushed stone as a mineral, but in the opinion of manufacturers, it is still an object of stone processing.
In 2021, the Ural practice spread throughout the country, Glebov continues. Corresponding notifications from tax authorities began to arrive all over Russia. The general director of the Russian office of LafargeHolcim, Maxim Goncharov, said that his company also received demands from the tax authorities to recalculate the mineral extraction tax.
The accrual of severance tax on crushed stone will lead to an increase in prices for it by at least 10%, Goncharov estimates. According to Glebov, the material may rise in price by 15–20% if additional tax is charged for several previous years, taking into account fines and penalties.
The increase in tax threatens with an increase in wage arrears, a reduction in personnel, an increase in prices, a decrease in the competitiveness of products and, accordingly, an increase in the cost of building roads and houses, follows from the letter of the head of Karelia.
Increased taxes can lead to bankruptcy of enterprises and a shortage of rubble, Goncharov said. There are already examples of bankruptcy petitions: due to non-payment of the recalculated severance tax, the Interdistrict Inspectorate of the Federal Tax Service of Russia for the Chelyabinsk Region filed a bankruptcy petition for the Biyankovsky crushed stone plant, which is part of the National Non-Metallic Company. In December, the parties entered into an amicable agreement: the plant pledged to pay 127.7 million rubles, of which the tax itself is 79.7 million rubles, and the rest consists of penalties and fines.
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