The Bucharest Stock Exchange (BSE) will suspend normal trading for one hour today in protest against the inconsistency of the fiscal legislation in terms of the taxes investors have to pay.
This is the first time the Stock Exchange has ever suspended trading in protest against the authorities' actions or statements. This is also the first protest in Romania that stems from the dissatisfaction of the taxpayers who want to pay their taxes but nobody explains them in a coherent manner how to do it. Today, January 25, is the deadline for filing tax statements by investors for their gains of last year, as stipulated by the legislation in force.
"The unclear stipulations regarding taxation related to the Stock Exchange are likely to seriously affect the perception of investors about the Romanian fiscal system and the confidence in the capital market," the Stock Exchange release reads.
"Having taken note of the exceptional situation of the capital market generated by the uncertainty about the tax obligations of the investors, as a result of the ANAF (National Fiscal Administration Agency) release, and of the positions expressed by ANAF officials, which contradict the stipulations of the Fiscal Code in effect, and alarmed by the lack of any response from the Public Finance Ministry, the Board of the Bucharest Stock Exchange decided to protest by suspending the trading session on January 25, 2007 for one hour to call the attention to the absurd situation in which a loss-making investor ends up crediting the state," the release adds.
ZIARUL FINANCIAR warned about the contradictions in the fiscal legislation in an article run in its Monday issue. ANAF later tried to come up with a series of clarifications, and its representatives told the media the investors have to pay a tax on their gross gains, without deducting the losses incurred from transactions.
The statements of the ANAF representatives contradict the Fiscal Code and have caused a stir on the capital market, particularly because most brokers had already told their investors they had to pay tax on the net gains, as they had understood from the law. The anger of the brokers peaked on Tuesday night, when their representatives in the Stock Exchange's Board decided to suspend trading as a protest.
The Finance Ministry yesterday replied to the capital market protest by issuing a release that quotes passages from the legislation in force, though it is still unclear what the investors are actually supposed to do.
"Net gain/loss is recorded at the end of the year based on the special statement filed by the taxpayers as bound by the law until May 15, 2007," the release says, suggesting that the Finance Ministry, too, is in favour of the application of the 16% tax on the gross gains (the entire release is available in Romanian on the ZF.ro website). The release does not mention the protest of the brokers.
Paying the tax only for the transactions that yielded a profit for the investor and balancing it against the losses as late as at the end of the year, would mean, the capital market representatives say, crediting the Finance Ministry for free.
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