The Central Bank proposes to amend the Tax Code on the payment of taxes on coupon income on bonds, RBC was told in the press service of the regulator. The proposals were sent to the Ministry of Finance and are now under consideration, the department confirmed.
The amendments provide for a new procedure for determining the size of the tax base in respect of coupon income. This includes situations where an investor owned bonds for a short time, but he had to pay personal income tax on all accumulated coupon income.
As a result of the change in the procedure for determining the tax base, the amount of personal income tax payable on coupon payments will also change, the Central Bank said. A representative of the regulator told the publication that the initiative was conceptually supported by the Ministry of Finance and financial market participants. The Central Bank expects that the amendments will be approved already this year and will come into force on January 1, 2023.
Previously, the Association of Bondholders applied to the Central Bank about taxes on coupon income. According to the representative of the latter, in some cases, brokers actually withheld a tax ten times higher than the 13% indicated in the Tax Code.
The proposed changes primarily apply to situations where an investor purchased bonds shortly before coupon redemption, but personal income tax was withheld from him for the entire coupon period. As a result, overpaid funds were returned to investors after the tax period, but sometimes the return of funds had to wait more than a year.