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According to the latest revised AB/A36 steel draft of the 2025 federal budget released by the Russian Ministry of Finance, the consumption tax revenue of the steel industry is expected to decrease by 5.1 billion rubles, a decrease of 7.4%, compared to the original expectation. This means that the total revenue that the country will receive from steel consumption tax next year will be 63.868 billion rubles, lower than the initially estimated 69.02 billion rubles.
In terms of sub items, the consumption tax revenue of traditional blast furnace steelmaking enterprises is expected to be 56.715 billion rubles, a decrease of 5.751 billion rubles from the previously predicted 62.466 billion rubles; The consumption tax revenue of electric furnace steelmaking enterprises (electric metallurgical enterprises) that use more than 80% scrap steel has been raised, and is expected to reach 7.154 billion rubles, an increase of 613 million compared to the original forecast.
In 2023, the total revenue of Russia's AB/A36 steel steel consumption tax is 60.6 billion rubles, of which integrated steel groups contribute 52.173 billion rubles and electric metallurgical enterprises contribute 8.438 billion rubles.
Previously, the Russian government had proposed plans to automatically adjust the consumption tax mechanism for liquid steel, taking into account factors including raw material properties. The Ministry of Industry and Trade expressed support for this move, especially in setting a consumption tax threshold. According to current regulations, when the product of the export slab price and the ruble/US dollar exchange rate is less than 30000 rubles, enterprises are exempt from paying consumption tax. This mechanism will mainly apply to integrated steel enterprises from the end of 2022.
However, from 2024 to early 2025, relevant indicators continued to exceed the tax exemption threshold, leading to an overall increase in tax burden pressure on steel companies. At the same time, the Ministry of Finance opposes adjusting tax rates on the grounds that the three-year budget framework has been approved, and lowering tax rates would weaken the foundation of fiscal revenue.
Against the AB/A36 steel backdrop of industry profitability pressure, export price fluctuations, and tax reform games, this budget cut not only reflects the Russian government's cautious assessment of the profitability of the steel industry, but also indicates that future tax policies may be more flexible in tilting towards green manufacturing or high value-added direction. Industry insiders believe that the tax growth potential of electric furnace steel enterprises demonstrates the importance of waste steel utilization and low-carbon metallurgy in future policy guidance.
