Serbian petroleum company NIS will have to pay eco-tax unless it proves exemption

May 10, 2017

Photo: NIS
Serbian petroleum company NIS will have to pay eco-tax unless it proves exemption

Serbian authorities reiterated their position that all companies have to pay environmental tax, including the Petroleum Industry of Serbia (NIS) which allegedly doesn’t pay it on the basis of the Agreement on cooperation in the energy sector, signed between Serbia and Russia in 2008.

Serbian Minister of Agriculture and Environmental Protection Branislav Nedimović recently said that NIS would have to pay eco-tax unless the company proves that it is exempted by the agreement with Russia.

Nedimović also said that the agreement can’t arbitrarily be interpreted and that if one claims that Serbia exempted Russian Gazprom Neft of eco-tax, one should prove this.  Gazprom Neft bought NIS in 2008 for EUR 400 million with an obligation to invest EUR 550 million  in the modernization of the company by 2012.

Serbian Minister of Agriculture and Environmental Protection previously said in February that Serbia would file an appeal against all companies which do not pay environmental tax for lubricants and other products, and that the court would decide if NIS is exempted from the tax.

Nedimović said in late April that details regarding NIS’s eco tax debt would be known after the Inspection for Environmental Protection finishes its report.

The Inspection recently has conducted control in NIS, and Nedimović says that the amount of unpaid tax calculated by the inspection differs from the sum which was calculated by the NIS.

NIS doesn’t pay environmental tax since it was introduced in 2010. It is estimated that the budget loss from unpaid tax in this case is around EUR 9 million for the past six years.

The company annually produces 11,000 tons of lubricants and should pay into the budget of EUR 1.5 million every year. These funds partly serve to finance licensed companies for waste collection and recycling.

The question of the privileged position of NIS was raised in February by companies  lubricants importers. They said they would send a letter to Serbian Prime Minister Aleksandar Vucić with a request to either apply the tax to all or to abolish it.

They insisted that conditions in the Serbian market are not equal for all, because they have to pay RSD 12 per kilogram of imported lubricants, while NIS is exempted from this.

NIS said at the time that he met all tax obligations and that it operates in Serbia strictly according the law.  Media reported that NIS could be exempted from the tax based on the Article 13 of the Agreement on cooperation in the oil and gas sector which Serbia and Russia signed in 2008. The article stipulates that if the legislative changes in the way that tax conditions deteriorates, levies should be calculated in accordance with the laws in force at the date of this document.

Sources in Serbian government said in February that NIS could be exempted from the custom duties and taxes in terms of gas sector infrastructure and the modernization of the technological complex of the company, but not of the production of lubricants.