Gas producers to benefit from newly adopted tax code

The tax code passed by the Ukrainian Parliament yesterday included President Yanukovych’s proposal to raise the oil extraction tax to only 18.5% versus the 40% suggested in the previous version of the law. The President announced that raising taxes would lead to a substantial decrease in both Naftogaz’ production volume and income. An increase to 18.5% gives Ukrainian extraction companies a competitive edge while Russia is currently levying a 32% extraction tax on its gas producers.