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Financial Market Liberalization Proposed
The Federal Financial Markets Service is proposing tax benefits for participants in the Russian financial market. The move is intended to create a powerful influx of funds into Russia and make the country a world financial center by 2012. It has also noted the need to reduce administrative barriers to simplify the registration procedure for foreign issuers of securities. Significant changes in tax legislation would be needed to implement the agency's ideas. That could occur in 2009.
The benefits would mainly affect individuals and institutional investors and are expected to lead to reduced use of offshore companies by Russian companies. Russian financial companies now distribute most of their profits among their overseas subsidiaries, and the federal market regulator wants to return that money to Russia.
Another proposal by the agency is to “define the requirements for the disclosure of the ownership of Russian stock societies in more detail, especially information about final beneficiaries.” Analysts say that that move would be sure to increase the attractiveness of Russian securities for investors, by increasing transparency and minority shareholder rights. The agency also wants to take steps to increase the proportion of free floated issues from the current 20-30 percent to 40-50 percent. First the concept of “free floated” has to be established legislatively, which would at the same time reduce price manipulation.
Market participants think that the new measures would lead to a surge in investment activity within the country. That could lead t the danger of a bubble effect as price rise, however. In addition, the new conditions will lead to a new set of tax evasion schemes. The Finance Ministry is likely to oppose the measures.
www.kommersant.com
All the Article in Russian as of Mar. 07, 2008
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