Russia switches export tax scheme from US dollar to ruble

The Russian Ministry of Economic Development has announced it will revisit its export tax for wheat, grains, sunflower oils, and sunmeals, and it will abandon the US dollar in favor of the Russian ruble, according to an official statement on the ministry’s website late Tuesday.

Citing “the influence of exchange rates on the amount of the export duty” the statement confirmed that the change in currency had been agreed upon.

Although there is no explicit timeframe, it is expected to be implemented immediately, as the new marketing year starts on July 1.

“Recently, we have seen a trend towards a gradual increase in world prices for grains and oilseeds, and a simultaneous strengthening of the Russian ruble,” said Vladimir Ilyichev, Deputy Minister of Economic Development.

“Modernization of the damper mechanism for the export of agricultural products will help support our exports, while ensuring the stability of our domestic prices,” he said via the statement.

The export scheme was imposed as Russian authorities looked to manage rampant domestic price inflation and address fears that the pull of international markets could leave Russia with too little wheat to meet its own domestic needs.

The model has been revisited several times since its first introduction on February 15, 2020, but essentially increased the burden of tax as international prices rose, with the rate of the tax increase based on an underlying index price published by the Moscow Exchange (MOEX).

Only last week, that underlying index price crossed the $400/mt level, triggering a change in the outright tax level.

Agricensus also reported last week that Russia was contemplating a change to the scheme after the currency rallied on international markets.

“The formula for the tax was implemented when the exchange rate for the rouble was at around 70 ruble to the dollar, now it's 53 ruble to the dollar,” a Russian trader told Agricensus at the time.

Traders suggested that a switch of payments into rubles was also being considered.