New Delhi: Russian oil firm Rosneft, the biggest foreign investor in India’s energy sector, on Friday criticised the country’s taxation policy, saying it was a major hurdle in its expansion plans.
Rosneft and its partners had in August last year completed a $12.9 billion acquisition of Essar Oil to enter the world’s fastest-growing energy market. The company will, however, have to pay a 20% withholding tax even after paying corporate tax and dividend, Rosneft’s first vice-president for economics and finance Pavel Fedorov said.
The Indian market’s potential is unparalleled and “that’s why we love to invest in India," he said.
However, India needs to streamline its taxation system with international regime and not double tax foreign investors, he added.
“If an Indian company invests in Russia, it has to give tax and dividends, but on the other side, when we invest in India, we have to give all of this, but on top of it, we are being charged a withholding tax of 20%. For us, this it really not symmetrical."
He said Rosneft would like the inter-governmental dialogue to help on this issue.
“We really need your help in syncing up and streamlining the taxation system. It’s a major hurdle, which we would like to help in addressing," he said.
Rosneft, he said, was willing to invest in Nayara Energy, formerly known as Essar Oil. “We are looking at other assets. We are looking at expansion of our fuel network in India because we already have more than 4,000 fuel stations, but we do want to see it being done on a globally competitive basis. For that we do need to have clarity on taxation issues."
Fedorov said the company was also not able to claim credit of tax it pays on inputs in its Vadinar refinery in Gujarat.
While the Goods and Services Tax (GST), which unified over a dozen central and state levies, came into effect from 1 July 2017, five petro goods — crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) — were kept out of it.
“The second important point relates to GST. We get a lot of oil from outside to the Indian market but we cannot claim GST credit for the oil because gasoline and these are excluded from GST," he said.
Rosneft and its partners had in August last year completed $12.9 billion acquisition of Essar Oil to enter the world’s fastest-growing energy market. This April, they changed the name of the firm to Nayara Energy. Rosneft owns 49.13% of the company while global commodity trading and logistics giant Trafigura and Russia’s UCP Investment Group together own another 49.13%. The remaining 0.74% is owned by the Ruias.
Nayara operates a 20 million tonnes a year refinery at Vadinar in Gujarat and 4,756 petrol pumps.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.