The Duma has approved amendments to parts 1 and 2 of the Russian Federation tax code on second reading which should improve and clarify tax law on financial derivatives.
According to the Russian Federal Financial Markets Service (FFMS), the proposed changes will create additional opportunities to raise capital for Russia's stock and commodity markets, and give further impetus to the development of futures trading in commodities in the over-the-counter (OTC) market.
The modus operandi for taxing of securities transactions has been clarified in the bill, which has the effect of amending taxation of individuals and clarifying concepts in a number of sectoral laws by establishing definitions of financial futures contracts. It clears up and, in certain cases, removes liability to pay VAT on trades at the time of delivery. It also removes corporate income tax liability for clearing and settlement organizations.
It is proposed that market values of OTC financial instruments be applied to arrive at a basis for calculating taxable profit, the precise method for calculating this being determined by the FFMS.
The bill also clarifies the certain tax details with regard to repurchase transactions for securities- and loan-backed tradeable paper. Losses carried forward from trading in futures may be off-settable against profits. Tax treatment of stock-exchange and OTC trades will have equal status.
A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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