Ministerial Decree No. 828 of 1992 regarding the validation of the Regulations on the Procedure and Terms for Charging Mineral, Water Area and Seabed Royalties

1. To approve the attached Regulations for Charging Mineral, Water Area and Seabed Royalties. [*2200]

2. To entrust the Ministry of Finance of the Russian Federation, the Russian Tax Inspectorate with the task of drawing up and approving within a month, in conjunction with the Ministry of the Economy of the Russian Federation, the Committee of the Russian Federation on Geology and the Exploitation of Mineral Resources, the Ministry of Fuel and Power of the Russian Federation, the Committee of the Russian Federation on Metallurgy, and the Russian Federal Service for Supervision of the Safe Conduct of Work in Industry and Mine Inspection, instructions on the procedure and terms for paying mineral royalties into the budget.                               BEGIN COMMENTARY: The said Instruction No. 8 of February 4, 1993, State Tax Service of the RF No. 17 of January 30, 1993 and Federal Mining and Industrial Sepervision Agency of the RF No. 01-17/41 of February 4, 1993                                 END COMMENTARY [*3300]                               BEGIN COMMENTARY: Decision 22, 1998 recognized as invalid Item 3 of the present Decision                                 END COMMENTARY

     *3. To establish that the interim minimum rates of mineral royalties approved by the Decision July 9, 1992, No.  478, shall operate until a specific amount of such regular payments has been fixed on each exploited deposit in accordance file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 with the Regulations Mineral   Deposits, approved  by the Supreme Soviet of the Russian Federation on July 15, 1992.                                                             Y. GAIDAR [*1000] REGULATIONS ON THE PROCEDURE AND TERMS FOR CHARGING MINERAL, WATER AREA AND SEABED ROYALTIES (Approved by of the Russian Federation of October 28, 1992, No. 828) [*1]  

1. These Regulations have been worked out in accordance with the Law of the Russian Federation "On Mineral Lands and Resources" and lay down the procedure and terms for charging mineral, water area and seabed royalties, as well as the criteria for fixing the rates of such payments. In addition to mineral, water area and seabed royalties, the Law the Russian Federation on Mineral Deposits provides for charges for the reproduction of sources of mineral raw materials, licence-issue levies and excise duties, the amount, method and terms of charging, to be determined by appropriate normative documents. Mineral royalties shall include charges for mineral prospecting, exploration and development rights and also payments for the right to construct and operate non-mining underground structures. Mineral, water area and seabed royalties shall be charged from all mineral users. Exemptions shall be effected in accordance with Article 40 Law of the Russian Federation on Mineral Lands and Resources. [*2201]

2. Mineral royalties shall be charged in the form of cash payments, a part of the volume of mineral raw materials extracted or other goods produced by a user, execution of work or provision of services or the charging of sums of forthcoming payments to the republican budget of the Russian Federation and to the budgets of a constituent republic of the Federation or a territory, region, autonomous entity, district or city as an equity contribution to the statutory capital of a newly-formed mining enterprise. The form of payment and size and terms of charges on each object of licensing shall be established in a licence. [*3]

3. Payments for the right to prospect for and evaluate mineral deposits shall be charged in the form of regular payments throughout the time this work is being done. The terms of charging the payments shall depend on the contractual (estimated) cost of the said work, the period for its fulfilment, and the size of the area accorded to a mineral user. The minimum rate of payment for the right to prospect for and evaluate mineral deposits shall amount to 1 per cent of the contractual (estimated) cost of the said work, and the maximum 2 per cent. A specific amount of payments shall depend on the type of mineral, the economical-geographic conditions of the area, and shall be fixed via competitive tenders or auctions by the bodies granting a licence for the right to do the said work. In the case of the area subject to mineral exploration and assessment, payment for the right to carry out the said work shall be set depending on specific annual charges per a square kilometre. The specific payments for 1 sq. km of the area per year shall be calculated by dividing the rate of payment (1 to 2 per cent of the overall cost of the work) by the area of the allotted territory and the duration of the work in years. If a mineral user returns a part of the prospected area, he shall be exempted from paying any further royalties on it. [*4]

4. The terms of charging royalties on mineral exploration shall be the same as on prospecting. The minimum rate of exploration royalties shall amount to 3 per cent of the annual estimated cost of the work, and a file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 maximum 5 per cent. The specific amount of such royalties shall be determined by the bodies granting a licence on the basis of the results of tenders or auctions. [*5]

5. In the event of a prolongation of the mineral exploitation term for the completion of prospecting and exploration work, the amount of earlier-established royalties shall be increased by 50 per cent. After the completion of the prospecting and exploration work, the amount of royalties shall be corrected with regards to its actual cost. No charges shall be exacted for the right to mineral exploration within the boundaries of the mining allotment granted to the user for the extraction of this mineral. All mineral prospecting and exploration royalties shall be remitted to the budgets of the districts and cities where the mineral exploitation is being carried out. They shall be included in the costs of prospecting or exploration work. [*6]

6. Regular payments shall be charged for associated production of minerals during prospecting in the same amounts as the charges for the right to produce the appropriate minerals. [*7]

7. Mineral royalties shall be paid in the form of a single charge, as well as subsequent regular payments from the start of exploitation throughout the duration of the licence. The initial size of single mineral royalties shall be determined by the Committee of the Russian Federation for Geology and the Development of Mineral Resources or its territorial units by agreement with the Ministry of the Economy of the Russian Federation, with amounts of at least 10 per cent of regular charges in terms of the average annual estimated capacity of an extracting enterprise. The final sum of the single charge shall be fixed on the basis of the results of a competitive tender or auction. [*8]

8. When granting a combined licence on the terms of entrepreneurial risk, including mineral prospecting, exploration and production, payments shall be made in the form of a single charge when issuing the licence: the size shall be determined during a tender or auction. Subsequent regular charges shall be determined separately for the right to conduct each type of work.

9. Existing mining enterprises engaged in the development of mineral deposits prior to the enactment of these Regulations shall not pay single charges for the right to extract minerals. [*10]

10. As a condition for charging mineral royalties, maximum permissible levels of regular payments shall be introduced according to the appendix. Regular payments shall be determined as a percentage of the value of the mineral raw materials extracted with due account of normative losses of minerals in the deposit, and shall be included in the prime cost of their production, with the value of materials calculated on the basis of sale price of the appropriate output of goods, excluding value added tax (VAT). Specific amounts of regular payments shall be determined for each deposit with regards to the type of mineral, the quantity and quality of reserves, natural-geographic and mining conditions, risks for the mineral user and the profitability of the workings of the deposit, and shall be set by the bodies granting a licence on the basis of results of competitive tenders or auctions. The size of payments for supernormative losses in mineral extraction shall be doubled. Such payments shall be made once a year on the basis of the results of a survey-based estimate of recoverable reserves in the deposit and an assessment of the extent of the supernormative losses, at the expense of the profits remaining at the mineral user's disposal. [*11]

11. The category of mineral raw materials the royalties are paid for shall include all types of minerals file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 indicated in the licence. [*111] When extracting individual minerals, the value of conditioned underground waters withdrawn from the earth's depths, or of non-recovered waters which have been polluted by the extraction of the mineral, shall be included in the royalty. [*12]

12. Should a mineral user sell some mineral raw materials or products of their technological processing on barter terms or in exchange for export deliveries, the value of export deliveries in hard currency or in roubles (for the rouble zone) shall be included in the overall value of the mineral raw materials for the purpose of determining the size of royalties, while the value of the raw materials in direct barter trade shall be estimated on the basis of the market value of similar raw materials or processed products at the time of their sale. [*13]

13. When selling commodity products of a higher degree of technological processing of mineral raw materials, the size of royalties shall be corrected by a reducing coefficient, determined by the ratio of the prime cost of the minerals extracted and the prime cost of the sold products of their processing. [*14]

14. The size of royalties for widespread mineral and mineral water deposits shall be established by constituent republics of the Russian Federation or by territories, regions and autonomous entities. The list of widespread minerals as applied to individual areas shall be determined by the Committee of the Russian Federation for Geology and the Development of Mineral Resources jointly with the constituent republics of the Russian Federation or territories, regions and autonomous entities. [*15]

15. Charges for the right to use waste from mining and processing enterprises shall be fixed under a separate licence in the amount of 25 to 50 per cent of the appropriate mineral royalties. [*16]

16. A discount for mineral depletion may be granted to a user engaged in the extraction of a scarce mineral with low cost effectiveness of deposit mining, or in the production of a mineral from lower-quality residual reserves, excluding cases where the deterioration of mineral stocks was engendered by selective working of the deposit. The decision to set a discount for mineral depletion shall be taken by the bodies which have granted a licence to exploit the deposit, after an examination of geological reports and feasibility studies submitted by the user. [*17]

17. Hydrocarbon (oil, gas condensate and natural gas) royalties shall be allocated in the following order: the budget of a district or city - 30 per cent; the budget of a constituent republic of the Russian Federation or a territory, region or autonomous entity - 30 per cent; the republican budget of the Russian Federation - 40 per cent. Other mineral royalties, except those on widespread minerals, shall be allocated in the following order: the budget of a district or city - 50 per cent; the budget of a constituent republic of the Russian Federation or of a territory, region or autonomous entity - 25 per cent; the republican budget of the Russian Federation - 25 per cent. The single charge when granting a combined licence, including mineral prospecting, exploration and extraction, shall be allocated in the same order as the royalty on the appropriate mineral. All the royalties on widespread minerals shall be remitted to district and city budgets. When extracting minerals in an autonomous entity which is part of a territory or region, the royalties shall be remitted to the file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 territory's or region's budget at the expense of half the appropriate payments into the republican budget of the Russian Federation. Royalty allocations in the case of unique mineral deposits or groups of deposits between budgets at different levels may be established in other proportions. The proportions shall be established by the consent of all interested parties. In disputes in accordance with the Law Russian Federation on Mineral Lands and Resources, the decision on this issue shall be taken by the Supreme Soviet of the Russian Federation. [*18]

18. Royalties on continental shelf deposits and those located in a 200-mile exclusive economic zone shall be paid in the order and terms laid down by these Regulations for mineral land deposits.                               BEGIN COMMENTARY: Concerning the system of payments for the use of the continental shelf see Federal Law                                 END COMMENTARY Water area and seabed royalties shall be established depending on the property leased, its configuration, the thickness of the water layer, the objects of mineral exploitation, the productivity of the water area, as well as with regards to the availability of navigation routes, communications lines and engineering structures in the area of operations. The specific amount of royalties shall be determined according to registers drawn up on the basis of zoning of the continental shelf and the 200-mile exclusive zone by geographic-economic and ecological characteristics, with regards to the regime of operations in zones of special attention (areas with the requisite natural environment for the functioning of unique flora and fauna; areas in need of coastal land protection; and areas subject to storms, devastation and erosion). The size of royalties shall be fixed by bodies granting a licence for the right to use a particular water area or sections of the seabed, by agreement with state environmental agencies and other competent bodies. Royalties on mineral deposits in the continental shelf shall be allocated in the following order: the budget of a constituent republic of the Russian Federation or of a territory, region or autonomous entity - 60 per cent; the republican budget of the Russian Federation - 40 per cent. Royalties on mineral deposits within the 200-mile exclusive zone shall be remitted to the republican budget of the Russian Federation. [*19]

19. Royalties on the use of the earth's depths to build and operate non-mining underground structures shall be charged in the form of one-off contributions and/or regular payments. The rate for such royalties shall be established in the range of 1 to 3 per cent of the estimated cost of a project and the cost of services provided in its operation. The specific amount of such royalties shall be determined by licencing bodies on the basis of the size of the earth-interior section provided for use, the advantageous qualities of the earth's depths, and the degree of ecological danger inherent in their use. The charges shall be included in the prime cost of the structures. The said royalties shall be remitted to the budgets of the districts (cities) where the appropriate earth-interior sections are located. [*100] Appendix to and Terms for Charging Mineral, Water Area and Seabed Royalties MAXIMUM PERMISSIBLE LEVELS OF REGULAR ROYALTIES ------------------------------------------------------------------------                                         Payment levels as percentage of                                              the cost of extracted                                                     minerals -----------------------------------------------------------------------Oil, condensate and natural gas 6-16                               BEGIN COMMENTARY: To amend this Decision Decision Federation No. 1212 of November 3, 1994 established the maximum level of regular payments for the right to extract coal in the amount of 1 - 3 per cent of the cost of the extracted coal file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 from January 1, 1995 Decision 1997 spread, as from May 1, 1997, the operation of the Decision Government of the Russian Federation No. 1212 of November 3, 1994 to the extraction of combustible shales                                 END COMMENTARY *Coal*, oil shale and peat                               3-6 Ferrous Metals (iron, manganese,                       1-5 chromium and vanadium) Ferrous and rare-earth metals (copper,                 2-6 lead, zinc, tin, nickel, cobalt, molybdenum, mercury, antimony, bismuth, cadmium, aluminium, strontium, titanium, circonium, lithium, tungsten, tantalum, niobium and others) Dispersed elements                                     4-6 [*10001]                                     BEGIN COMMENTARY: Decision 26, 1996 introduced, as a partial  amendment of this Appendix, the maximum level of the regular payments for the right to excavate precious metals (gold, platinum group metals and silver) at a  rate of 2 to 4 percent as of January 1, 1997 Noble metals (gold, platinoids                          *4-10 and silver) Diamonds and precious stones                           4-8 Coloured stones (gems)                                 4-6 and piezooptical raw materials Radioactive raw materials                              2-6 Mining and chemical stock (apatite,                    1-5 phosphorite, common, potassium, megnesiumn and boric salts, sodium sulphate, sulfur ore and sulfur in oil, gas, sulfuric pyrite and complex ore deposits, barite, carbonate raw materials for chemical industry, iodine, bromine, brine and others), thermal waters Mining raw materials and                               2-5 non-metalliferous stock for metallurgy (asbestos chrysotile and for special products, graphite, magnesite, brucite, dunites, dolomite, fluxing limestones, clays bentonite, moulding, fusible and refractory, kaolins, quartz and quartzites, quartz, quartz-and-feldspar, siliceous and glass raw materials, talc, talc stone and pyrophyllite, file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13] Get a Document - by Citation - GARANT 10003139 rock crystal, quartz for smelting, zeolites, fluorspar, common mica, phlogopite and vermiculite, asphaltites, bitumens and bituminous rocks, ozocerite, mineral paints, abrasives and others) Underground fresh waters                               2-8 Non-ore building materials (cement raw                 2-4 materials, gypsum and anhydride, chalk, stones facing, sawn, rubble and for ballast, construction sands, sand-and-gravel mixture, pebbles, gravel, perlite and claydite raw materials, brick clays and other such building materials) HISTORY: 10/28/1992, 11/3/1994, 8/26/1996 [*RELATED] REFERENCES: GARANT 11003139 THE FOLLOWING DOCUMENTS MAKE REFERENCE TO THIS DOCUMENT: ( TELEGRAM OF MIN. OF FIN. ... NOS. 120, NP-4-02/173N OF NOV. 2, 1993 ) ( INSTR. ON REMITTANCE TO BUDGET OF ROYALTIES FOR RIGHT TO USE SUBSOIL ) ( DECISION OF GOVERNMENT OF RF NO. 1212 OF NOVEMBER 3, 1994 ) ( LETTER OF STATE TAX SERVICE OF RF NO. NP-6-02/492 OF DEC. 19, 1994 ) ( DECISION OF THE RF GOVERNMENT NO. 478, OF JULY 8, 1992 ) ( LAW OF RF NO. 2395-1 OF FEBRUARY 21, 1992 ON UNDERGROUND RESOURCES ) ( LET. OF STATE TAX SERVICE OF RF NO. NP-4-02/81N OF MAY 31, 1993 ) ( DECISION OF GOVERNMENT OF RF NO. 1007 OF 26.08.96 ) ( DECISION OF GOVERNMENT OF RF NO. 1004 OF 22.08.98 ) ( LETTER OF MINISTRY OF NATURAL RESOURCES OF RF NO. VB-61/3852 ) ( INTERIM PROCEDURE (ENDORSED BY MINISTRY OF FUEL ON MAY 6, 1998) ) file:///D/HTML/rus22315E.htm[16.01.2025 10:01:13]