Oil duty causes setbacks

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Kerim Raibetov

2008-10-18

ASTANA, Oct. 16— The 10th session of the Kazakhstan-EU subcommittee on trade, investment, energy and transport, at which a number of thorny issues were discussed, has drawn to a close in Astana.

The Kazakh deputy minister for industry and trade, Janar Aitjanova, said that the current practice of levying customs duty on exports of crude oil has been a stumbling block for talks on the country’s entry to the World Trade Organisation (WTO).

“The export duties levied in Kazakhstan were discussed at today’s session. Our European partners have not reacted positively to the imposition of a duty on crude oil exported to member states of the European Union (EU),” Aitjanova noted.

According to ministry data, crude oil currently accounts for 70 percent of the nation’s exports. Aitjanova pointed out that duty on oil exports was intended to stimulate oil refinement in the country. To offset export duties, she called on European companies to invest in Kazakhstan’s oil refinery sector.

“This issue is the main reason why our talks with the EU on entry into the WTO have not come to fruition,” the deputy minister concluded.

Customs duty on oil exports was introduced in Kazakhstan last May. At present, it amounts to $203.80 [USD] per tonne, while payers of the so-called “rent tax” on oil exports are charged $27.43 per tonne.

Duty is calculated according to a formula based on global oil prices, and is payable on all oil exports except those under contracts with provisions on the stability of the customs regime.

In 2007 Kazakhstan’s volume of foreign trade amounted to $80.5 billion, a third of which was with European Union nations, to whom Kazakhstan currently exports only raw materials and from whom Kazakhstan imports cars, equipment, state-of-the-art pharmaceuticals and other high-tech products.

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