Large Russian Metallurgical Companies May Face Double Taxation Problems

Large Russian metallurgical companies may face double taxation problems

The Russian "Kommersant" reported on July 12 that the Russian Metallurgical Corporation, which currently has assets in the United States, may face the dilemma of double taxation. Companies such as Russia's Evraz Group and Novolipetsk Group have not succeeded in destroying the United States. % Of the steel taxation measures have not been exempted from the Russian government's metal export tariffs, and its related products will face the issue of tariffs on exports from Russia and into the US market. Experts say that the taxation measures have led to increased costs for Russian Steel and Metallurgical Corporation, which will ultimately be borne by American consumers.

　　In order to deal with issues such as rising domestic steel prices and rising government construction project costs, Russia will impose an export tariff of US$115/ton on steel slabs starting from August 1. Since 2018, the United States has imposed tariffs of 25% and 10% on imported steel and aluminum products (except Australia and Argentina, Canada and Mexico will be exempted from taxation in 2019, and Brazil and South Korea will be exempted from steel tariffs). In this context, large steel and metallurgical companies will face the risk of double taxation. Russian First Deputy Prime Minister Belousov pointed out that the introduction of steel export tariffs is part of the Russian government's internal market protection measures, not a punitive measure for metallurgical companies.

　　 Krasnozhnov, head of the analysis and research department of Alpha Bank, predicts that Russia’s tariff measures will result in a 5% to 8% drop in EBITDA of large Russian metallurgical companies in 2021. Ojevraz Group and Novolipetsk Group will assess the economic feasibility to decide whether to continue to supply slab products. The slab market accounts for a small proportion of the total global steel trade. Since the implementation of the steel and aluminum taxation measures, the United States has gradually imported slabs from Brazil, Mexico and Canada to replace related products previously imported from Russia.

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