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RSUJ organized the “Taxation on Income for Entities Issuing Securities” roundtable, with the support of ART DE LEX


On 12 April 2017, the Department of Financial Law of the Russian State University of Justice (RSUJ) held a roundtable discussion about the “Taxation on Income for Entities Issuing Securities,” with the support of the ART DE LEX law firm.

The roundtable highlighted important examples of transactions for those participating in the securities market, including the need for full compliance with issuing and contractual documentation requirements.

The roundtable discussed the complex and relevant issues of taxation for all participants–issuers, shareholders, investors, and others–in the Russian securities market, in light of constantly changing legislation affecting the taxable base.

The moderator of the roundtable, Ekaterina Kostikova, Ph.D., associate professor in the Department of Finance Law of the RSUJ, analyzed judicial disputes related to the taxation of issuing securities.

Valery Vaysberg, the director of the Analytical Department of GC REGION, described the Russian debt market and the significance of securities involving several co-organizers. Vaysberg stressed that the average volume of corporate bond issues, in the domestic market, over the past five years, has exceeded 1 trillion RUB per year. This amount is comparable to the growth in the volume of bank loans to the non-financial sector.

The vice president and head of taxes at IC Renaissance Capital, Elizaveta Yermischkina, analyzed judicial practices related to disputes involving the taxation of securities transactions.

Olga Starovoitova, the chairman of the NAUFOR Accounting and Taxation Committee, discussed the documentation requirements for issuing equities, highlighting which documents provide proper confirmation for security transactions.

Irina Chervko, the director of securities issuing for PAO Bank FC Otkrytie, explained the types of transaction documentation required for issuing equities and the process of structuring and registering the issuers.

During the discussion, several individuals noted the importance of this topic for the banking sector since banks hold the dominant position in the DCM (Demand Chain Management) market. In contrast, the share of nonbank organizers does not exceed 15-20 percent. The speakers and participants stressed the inconsistencies of the tax authorities, with respect to the tax base, when issuing securities, which may have a negative effect on the established interactions of all participants in Russia’s equity market. As the managing partner of ART DE LEX, Dmitry Magonya, explained, given the growing demands for raising both equity and debt, through bonds, the need to understand the requirements for issuing equities is particularly important. The existing regulatory and tax problems require the active input of the regulators, industry associations, and market participants, specifically banks and other professionals. Based on their own experiences, the speakers noted the existence of reasonable discrepancies between the contractual and issuing documentation, in the Russian practice.

At the conclusion of the roundtable, the participants agreed on the need to develop further expert dialogue on improving corporate and tax legislation, with respect to issuing securities, to include representatives from the relevant ministries and agencies.

Other participants of the round table discussion included PAO Moskovskaya birzha, the Association of Regional Banks of Russia, SRO National Stock Association, and PAO Promsvyazbank.