The so-called tax maneuver was the key topic of the meeting of Belarus President Alexander Lukashenko with President of Russia Vladimir Putin in Moscow.
The maneuvre, which switches tax from exports to source, will likely cost the Belarusian economy billions of dollars it can’t afford to lose. Belarus has already lost almost $3.5 billion and by 2024 the losses may reach up to $10.8 billion.
While President Aleksander Lukashenko states that Moscow promised to compensate for the losses (that cause higher oil prices in Belarus), the Russian government stresses that no one actually promised to do that.
Not brothers anymore
In the run-up to the talks with his Russian counterpart President Lukashenko stated that Belarus is not a ‘brotherly nation’ but is a partner for Russia.
“I don’t say ‘a brotherly nation’, as I have been informed, Russia does’t see it this way, new decision-makers there reject this notion. Okay, let us be partners,” the Belarusian leader said.
The head of state also recalled that last year the states had worked out an action plan on the development of the union state for the forthcoming five years. It covered macroeconomics, budget, manufacturing, foreign policy, transport, migration, healthcare and culture.
According to the president, the sides also agreed to embark on negotiations on gas prices and oil-related issues amidst Russia’s tax maneuver. Despite the issues had been expected to be tackled by the end of the year, the deadline was not met.
Talks and money
The negotiations that took place in Minsk last week were almost thwarted.
First, Deputy Prime Minister Kozak failed to discuss compensation for the tax maneuvere with his Belarusian counterpart. Then Prime Minister Dmitry Medvedev suggested two ‘integration scenarios‘ in which Belarus would have to make serious concessions.
The Russian side expressed its readiness to provide the Belarusian oil refineries with a subsidy provided closer integration of economies and fulfillment of commitments (creation of a single tax, customs, monetary, excise, and economic policy) within the framework of the Union State.
“Tax maneuver is our internal business. If you want us to create the same conditions for your refiners, let us make it equally profitable. Let’s combine excise policy.
We have a lack of confidence in the work of your customs officers, let our customs officers work there, we will establish data exchange,” Russia Finance Minister Anton Siluanov said.
According to Siluanov, the Belarusian side asks Russia for $2 billion subsidies a year, the amount that Russia is not ready to spend at the moment but under certain conditions may reconsider.
“The presidents scrutinized the Union State agreements and their implementation. They admitted that the two countries lag behind in fulfilling several provisions of the agreements. They announced plans to intensify these processes,” Spokesperson of President Lukashenko Natalia Eismont said.
Meanwhile, Russia and Belarus will create a working group that will prepare proposals for integration and resolving urgent and controversial issues.