According to Article 181 of the Tax Code motor gasoline and diesel fuel are regarded as excisable goods. At the same time the additives involved in the production of the fuels are not excisable goods. Aviation kerosene in accordance with subparagraph 13 of paragraph 1 of Article 181 of the Tax Code refers to excisable goods. However, according to subparagraph 17 of paragraph 1 of Art. 183 of the Tax Code is exempt from excise taxation, including operations on the sale or transfer of aviation kerosene. Thus, in the process of production of fuel related to excisable goods both excisable and non-excisable goods are involved, which has always given rise to a number of questions for taxpayers as to whether the goods produced as a result of such mixing are excisable or non-excisable, Since, in accordance with paragraph 3 of Art. 182 of the Tax Code for the purposes of calculating excise tax equates to the production of any mixing of goods in places of storage and sale, which results in excisable goods, for which Article 193 of the Tax Code sets the excise rate in an amount exceeding the excise rates for goods used as raw materials. Meanwhile, Article 193 of the Tax Code contains a single flat rate of excise duty for diesel fuel, regardless of the type of seasonality of the fuel, while with regard to automobile gasoline excise duty rate is provided depending on the class. Consequently, obtaining motor gasoline with a higher octane number by mixing motor gasoline and additives of the same class as the feedstock, the rate of excise duty on the resulting product does not exceed the rate of excise duty on the product used as feedstock. The same applies to diesel fuel.

On the issues of mixing excisable and non-excisable goods in the production of fuels, which results in a product with the same class, the same excise tax rate as the products acting as raw materials, the Ministry of Finance of Russia until August 2020 considered such operations as not complying with the requirements of paragraph 3 of Article 182 of the Tax Code, as previously expressed by the department in letters №03-07-06/40952 of 03. 10.2013, №03-07-06/24461 from 27.04.2016, №03-13-08/64636 from 04.10.2017.

However, since August 2020 in the position of the department appeared the concept of the volume of the produced product, which should be understood as that part of the mixture that meets the conditions of paragraph 3 of Article 182 of the Tax Code, in particular, the object of excise taxation arises in the proportion of the produced product that falls to the share of non-excisable components. This position of the Ministry of Finance of Russia was voiced in a letter dated 11.08.2020 № 03-13-08/70101@ and then the Federal Tax Service of Russia in a letter dated 13.08.2020 № SD-4-3/13023@ brought this position to the tax authorities.

Similarly, the Federal Tax Service of Russia in its Letter No.SD-4-3/5330@ of 19.04.2021 on the calculation of excise duty on motor gasoline in case of mixing motor gasoline with a lower octane number and additives to produce gasoline of the same class but with a higher octane number has expressed its position based on the fact that the product produced is subject to excise duty. In this case, the letter of the Federal Tax Service does not contain a clause stating that the object of excise taxation arises only in the proportion of the produced product which is attributable to the share of non-excisable components.

Having analyzed the letters of the Ministry of Finance issued before and after August 2020, the following conclusion can be made with respect to the tax periods starting from the 3rd quarter of 2020 and up to the present time:

- when diesel fuel and aviation kerosene are blended, the object of excise taxation arises with respect to the volume of aviation kerosene involved in the production process;

- when automobile gasoline and additives are blended to produce fuel of the same class but with a higher octane number, the object of excise taxation arises in terms of the newly obtained fuel obtained.

Given the new approach of the tax authorities to the issue of calculating excise tax when products are produced by mixing excisable and non-excisable goods, such operations are recognized as subject to excise taxation. However, this position of the Ministry of Finance of Russia and the Federal Tax Service of Russia is advisory in nature, and judicial practice on this position has not yet been formed. When considering the issue of excise taxation in the production of winter diesel fuel, the department considers as the tax base only the share of the produced product attributable to aviation kerosene, while with regard to additives there are no comments. At the same time, when considering the issue of excise taxation in the production of motor gasoline, the Russian FTS did not make an exception for the volumes of additives used in production.

Given such an ambiguous position of the agency, it is likely that this norm may be enshrined at the legislative level through the introduction of further amendments to the Tax Code of the Russian Federation.

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