From 2018 the holders of bonds - physical persons will be exempt from paying a Personal Income Tax on income received

From January 1, 2018, a new order of determining the tax base in respect of a coupon yield on corporate bonds for investors-individuals has been introduced. The relative changes were made to the Tax Code of the Russian Federation by the Federal Law, which was recently adopted.

So, starting from the new year the profits of citizens, earned on the circulated bonds issued by Russian companies, emitted in the period from January 1, 2017 until December 31, 2020, will fall under the taxation, inclusive, if the income does not exceed the nominal value of the bonds plus the refinance rate of the Bank of Russia, increased by five percentage points.

To date, the refinancing rate is 9.25%. Thus, in current reality, only the yield on bonds, which coupon exceeds 14.25% will fall under taxation.

Currently the subject of taxation are both the income in the form of a discount, received when repaying bonds, and the interest income on bonds.

The innovation gives the opportunity for private investors to get an additional profit at the expense of tax exemption.

It should be noted that such type of investing as buying bonds is risky and does not exclude the possibility of loss. Stock market participants cannot guarantee profitability of their instruments.

We remind that a bond is a security, fixing the right of its holder to receive from the person issuing the bond, within the period of its nominal value or other equivalent property. The bond also provides to its holder the right to receive a fixed percentage from the nominal value or other property rights.