Kazakhstan’s PetroMining association said it had successfully conveyed the oil and gas industry’s concerns to the government, which has agreed not to introduce a planned increase in excise taxes on petroleum products starting Jan. 1, 2027.
The proposed measure would have increased the state’s share of any fuel price increase from 50% to 95%, PetroMining reported.
Under the current rules, oil and gas companies must pay the state 50% of any increase in petroleum product prices through excise taxes. For example, when the price of a liter of AI-92 gasoline or diesel rose by 6 tenge ($0,013) at several major gas station chains in Astana between August and September, the state collected 3 tenge of that increase.
The government had proposed raising its share to 95%. Under that arrangement, the state would collect 95 tenge for every 100 tenge increase in the price of fuel, leaving market participants with only a small portion of the increase.
Industry warns of economic consequences
PetroMining argued that the proposed tax increase would undermine the government’s own efforts to liberalize fuel prices. The association also cited declining domestic oil production and the substantial social obligations placed on wholesale petroleum suppliers.
According to PetroMining’s estimates, applying the proposed 95% rate could have imposed an additional burden on subsoil users averaging:
- 22,027 tenge ($50) per ton of oil in 2027.
- 39,675 tenge (%90) per ton of oil in 2028.
The association said it had informed government officials of the risks associated with the higher excise tax rate during consultations.
Industry appeal submitted to government
PetroMining said its calculations and supporting arguments, along with a joint appeal from the National Association of Subsoil Users, were submitted to the president and the respective government agencies.