Brokers warn: 10% advance tax on investors' earnings will bankrupt capital market

Seeking to raise budget funds, the Government wants to hike the tax rate levied in advance for Stock Exchange earnings from the current 1% to 10%, according to a draft emergency ordinance to modify the Fiscal Code, devised by the Finance Ministry. The measure is to be enforced as of June 1st, i.e. starting next week, with a 16% tax to be levied on all stock exchange earnings regardless of the holding period.

Prior to being enforced, the draft needs to be approved by Parliament.

Up until now, a 1% tax was levied on the profit made by investors on the capital market if the holding period exceeded one year and 16% if profit-making sales and purchases occurred within a year.

Brokers say raising the tax levied in advance is an absurd and hasty measure, which will lead to an imminent bankruptcy of the capital market in the context where 90% of stock exchange transactions are carried out by speculators, whose money will be blocked in the state budget, even though the state will eventually return the bulk of the amount to the investor at the end of the year.