UAH 43.4 billion in royalty for gas production paid by companies in 2023

_{Chart: Paid royalty for natural gas production 2021-2023 (in UAH billion)}

Tax payments and corporate social responsibility, especially during Russian aggression, are fundamental for strengthening the state's defence capability and a significant source of filling regional budgets.

In 2023, companies paid UAH 43.4 billion in royalties for gas production. Out of this amount, UAH 41.2 billion was directed to the state budget, and UAH 2.2 billion, or 5%, was received by regional budgets and budgets of territorial communities where the enterprises operate. Kharkiv and Poltava regions received the most significant amounts, where the lion's share of Ukrainian gas is produced.

Currently, the royalty's calculation is tied to internal price indicators. It is formed out of three indicators, and the highest is used as the basis:
• the price at which Naftogaz purchases the resource from private producers,
• the licensed commodity exchange's price,
• the average value according to Argus and ICIS reports.

It should be recalled that due to the full-scale war and the rapid increase in resource pricing since March 2022, the government was forced to reintroduce PSO in the gas market. Implementing this mechanism, on the one hand, allowed for an uninterrupted gas supply. Still, on the other hand, it influenced royalty indicators, as Ukrgasvydobuvannya pays it from the prices fixed by the Cabinet of Ministers.

Overall, the amount of royalty companies direct to the budget is influenced by the volumes of production and gas prices, which continue to decrease inside the country and in Europe.

But not only by royalty.

For every 1 hryvnia of royalty payments, producers, on average, pay about another 1 hryvnia of other taxes, fees, and costs. These include PIT and SSC, VAT, land and environmental taxes, military levy, income tax, property tax, etc.
As a result of operations in 2023, gas producers of the Association paid UAH 73.5 billion in taxes. This constitutes over 6% of all tax revenues directed to the state budget of Ukraine.

This amount of taxes equals almost one-sixth of the receipts from the European Union, governments of foreign states, international organizations, and donor institutions, according to data from the open state web portal Open Budget. Or it accounts for one-third of the healthcare expenditures from the consolidated budget.