There has been a further series of clarifications in relation to the taxation of gains made from share transactions to come into force on June 1, 2005: the Finance Ministry will continue to collect 1% on the gains made on each transaction, as has been done until now, but with regularisation now scheduled to take place at the end of the year by levying the higher rate of tax, 10%, on gains made from the entire portfolio of each taxpayer.
This represents the latest formula agreed on by the Finance Ministry with the chairmen of the budget-finance committees from the two chambers of Parliament, Varujan Vosganian and Mihai Tanasescu, the general manager of the Bucharest Stock Exchange, Stere Farmache, and Gabriela Anghelache, the CNVM (National Securities Commission) chairperson.
All the parties involved have agreed that applying the new tax in this way will give brokerage firms sufficient time to adjust their software applications accordingly. At the same time, the Finance Ministry will ensure itself a continued stream of revenue by continuing to levy the 1% tax on gains from each transaction.
The same rule will apply after January 1 2006 when the 16% tax on gains from share transactions will come into force, allowing this tax to come into line with the flat income tax. As a result, gains made from each transaction will be subject to 1% in tax, with the 16% tax being applied at the end of the year on gains from the entire portfolio, where applicable.
By levying 1% on the gains made from each transaction, the Finance Ministry will in fact be making sure that no income goes untaxed should taxpayers decide to withdraw their money from the Bucharest Stock Exchange before the end of the year.
Regularisation will of course entail the submission of income tax returns by each shareowner based on a form issued by brokers. The only ones exempt from this provision will those that trade less than 15 million ROL a year. A number of 10,000-12,000 people are expected to submit such returns.
The Finance Ministry says there will be no double taxation: if the 1% deducted for every transaction equals the 10% levied on the gains derived from the entire portfolio, then taxpayers will not pay anything else at the end of the year.
These clarifications are to be introduced in the form of an amendment to the draft law for the endorsement of the modification to the Fiscal Code during debates to be held by the Chamber of Deputies.
This all means that the provisions for the taxation of gains made from share transactions are to be changed once more in addition to the version produced by the talks in the Senate, which already forwarded the normative act to the Chamber of Deputies. razvan.voican@zf.ro
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