The Russian Central Bank will limit the preferential tax treatment for accounts trading on the forex market, as reported yesterday by Forex Magnates Russia. The Bank of Russia is likely to exempt funds placed in individual investment accounts (IIAs) on the forex market and funds committed to trading on overseas markets.
Discussions on the topic were carried out in the anticipation of the launch of a new financial product of named individual investment account (IIA) in the Russian market of brokerage services since the beginning of 2015. Until now, no limitations on the financial instruments invested in and the types of securities accounts for IIAs were planned.
“The Bank of Russia is preparing a draft regulation that limits the investment possibilities for IIAs and completely eliminates the possibility of their commitment to the forex market and foreign markets,” said the Advisor to the Director of the Department of the Securities and Commodity Markets to the central bank, Alexander Arefyev, speaking at the Ural Conference of the National Association of Securities Market Participants.
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According to Arefyev, investors will still be able to invest in the Russian market, including foreign financial instruments that are traded on it. “For the same purposes we are preparing a draft regulation addressing managed funds. The market has high expectations for this document,” said a spokesperson for the Bank of Russia.
In accordance with Federal law, the IIAs will be open from the beginning of next year. IIAs will be offered only by organizations with a brokerage license, respectively, stock market brokers and their management companies.
This tool is designed to increase the attractiveness of investments in capital market instruments for private investors by offering them tax deductions. In other words, citizens have the opportunity to open a brokerage account with special conditions, where the amount of funds qualifying for the tax rebate should not exceed 400,000 Russian rubles and the period of investments should be at least three years. During this period, the said funds will be benefitting from a preferential tax treatment, providing a tax deduction of 13%.
Meanwhile, the Russian government postponed the vote on a new forex legislation bill in October for another month, with no stipulation of a new date.