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Corporate law and governance, financial transaction taxes


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Comment by Project Group 2 (Corporate law and governance, financial transaction taxes)

11.11.2011 / MIFC


Commentary to the article - Tax Relief Promised to Investors, 09.11.2011, «Kommersant-Online»

Tax incentives for private investors are part of the Tax Project Group proposals. In our opinion, current taxation of private individuals does not attract long-term domestic investors to the Russian securities market.

Today, profits from sales of property owned for over 3 years are tax-exempt for private individuals. Profit from securities sales, however, are not eligible. As a result, Russian citizens are more interested in investing in assets other than securities (e.g., real estate as opposed to real estate mutual fund shares).

We propose to make private individuals’ profits from securities and financial instruments transactions exempt from tax, if owned for over 3 years (amending Article 217 Paragraph 17.1 of the Russian Tax Code, by extending the existing rule to securities). This tax exemption shall be provided for listed securities and mutual investment fund shares.

We are currently discussing with the Federal Tax Service and the Russian Ministry of Finance the possibility of full or partial profit tax exemption for dividends and coupons.

Project Group №2