Taxation

The Russian securities market. Services provided by CJSC Finam (Russia) and asset management company Finam Management (Russia)

CJSC Finam is a professional participant of the Russian securities market that provides brokerage services along with conducting other professional activities on the securities market.

Asset management company Finam Management is a professional participant of the Russian securities market that provides asset management services and also runs investment funds, mutual fund and private pension funds.

Finam and Finam Management act as tax agents for profits derived from the sale of securities and operations involving futures instruments for the following categories of clients on the Russian financial market: - individuals, both recognized and unrecognized as Russian residents (in terms of the personal income tax); - legal entities not recognized as Russian residents (in terms of corporate profit tax).

The tax agent is under obligation to calculate, withhold from taxpayers and pay taxes to the Russian budget.

As for profit paid to taxpayers in the form of dividends on shares, the tax withheld when profit is paid will be transferred to the budget from the source of payment, i.e. an issuer (as tax agent). In other words, a client receives on his/her client (investment) account dividends the tax from which has already been withheld.

In the event that a foreign legal entity with the status of a non-resident for tax purposes is exempt from taxes in Russian territory in accordance with Russian legislation and double taxation treaties and provided that relevant confirmation is presented, such person will independently calculate and pay taxes in the country of its tax residence.

The following tax rates are applicable on the Russian securities market:

*In certain cases, other tax rates may apply in accordance with the Tax Code of the Russian Federation
The procedure for withholding a tax from a retail client if a broker or an asset management company acts as a tax agent is as follows:

The tax is calculated and paid by the agent at the time when a payment is made to a client (funds are withdrawn) and/or after the end of a calendar year. In the event the funds held on a client’s account at the time when funds are withdrawn are not sufficient to withhold the tax, the agent will be required to reduce the amount of funds to be withdrawn by the missing amount. In the event that the funds held on a client’s account at the time when a payment is to be made, are not sufficient to withhold the tax, (this may occur, for example, if the funds designated for the payment of the tax, at the time of withholding, are invested in securities), the agent will be required to submit information about the tax which has been calculated, but not withheld, to Russian tax authorities. In this case, a client will be required to pay the tax independently and file a tax return with fiscal authorities.

The Russian and international securities markets. Services are provided through Finam Limited (Cyprus):

Finam Limited (Cyprus) does not act as a tax agent with regard to the profits generated by the company’s clients from operations on the Russian and foreign stock markets. This circumstance in no way releases a client from the obligation to pay taxes in the country where he/she is a resident for tax purposes, if this is provided for by the tax legislation of that country.

For account opening inquiries and related questions please contact us directly.

Head of International Sales
Russian Financial Products
Maxim Trubnikov
trubnikov@finam.ru
Tel: +7 495 796 9388 ext. 2026
Fax: +7 495 796 9389