MIFC: Key Facts

A source of basic facts about the International Financial Centre in Moscow

Task Assignments

06.12.2011 / Moscow

Task Assignments given by the President of the Russian Federation following the MIFC International Advisory Board session
on 28 October 2011.

MIFC Events

24.04.2018

Annual NAUFOR Russian Stock Market Conference

10.04.2018

Moscow Exchange Forum 2018

Events Calendar

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Media Coverage

29.01.2014 / Interfax

Russia #3 Worldwide in Foreign Direct Investment

FDI in developing and transitional economies hit record highs in 2013, according to United Nations Conference on Trade and Development (UNCTAD) report.

06.04.2013 / Kommersant

Central Bank Builds Financial Center

FFMS merger with the CB will significantly improve regulation – as expected by reform participants and instigators alike. Yesterday the Bank of Russia, FFMS and Minfin reps made a public presentation of the financial megaregulator, as the process has entered implementation stage. In the meantime, MIFC mastermind Alexander Voloshin sees the future unification of oversight as a key milestone for Moscow as International Financial Center.

29.01.2013 / Interfax

MIFC Location to be Determined by Workgroup

Russian Prime Minister Dmitry Medvedev is planning to establish a workgroup to determine the location of Moscow International Financial Center (MIFC) infrastructure.

Our progress / Hot Topics

Trading infrastructure


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How to Use Investment Accounts

30.01.2015 12:00 / vedomosti.ru

Private investors’ dream of tax benefits has finally come true. From January onwards, anyone can open an individual investment account (IIA) and enjoy tax-free deposits of up to RUB 400k — or receive the entire income tax-free. Tax Code amendments introducing IIAs were passed over a year ago, but are in force starting this year. In January brokers and asset managers started opening IIAs for private individuals.

IIA is a common broker/trust account for cash and securities, but with 2 special tax benefits that apply to 3 year-plus accounts.

One is an income tax rebate equals the amount deposited by the taxpayer in the reported period in his individual investment account (IIA). The rebate equals the sum transferred into the account in the reported period, with a maximum of RUB 400k. Thus an investor can enjoy a rebate of up to RUB 52k paid tax. His income must be delared in the year the money was deposited in the IIA. Opening an account today means a rebate in 2016. However, private entrepreneurs, pensioners and others who generated no income and paid 13% tax are not eligible for this rebate.

They can use the other option. IIA transaction earnings are income tax free at the termination of the individual investment account agreement term, on condition that the account has been active for a minimum of three years. This benefit is limited only by the amount of profit made.

The law allows an IIA owner only one benefit of choice. Once you have filed a declaration for the return of 13% off your IIA deposit, the income tax rebate becomes unavailable to you, warns Vladimir Krekoten, Deputy General Director at Otkrytie Broker.

“A client can close the IIA with a confirmation from the tax authority to the broker that there were no rebates of the first type, and the broker will pay the client the entire income tax-free”, explains Head of Project Research at Finam Gennadiy Kuznetsov. Otherwise the rebate will only be available through a tax declaration.

The choice of tax rebate may be deferred until the mandatory 3 year of account operation expire, and it will be clear which rebate option is more profitable. However, market participants see the first option, available after a year, as the best bet in most cases. BKS experts say that for the second option to be preferable, investment yield must exceed 100%.

Transferring assets out of the IIA without loss of rights to tax rebate is only possible after 3 years. If you need cash at short notice, you can take it, but the broker/asset manager will report it to the taxman, the account will lose its privileges and earlier rebates will have to be returned to the state.

IIA opening is practically the same procedure as a broker account (or trustee account). IIA, however, cannot be opened for a third party, one IIA per person, a new account is opened once the previous one is closed.

IIAs are roubles only, with the sole exception of transfer of unsold assets from closed IIA to a new one (when switching to a new broker or AM).

You can invest IIA money into any security traded in Russia: shares, bonds, investment fund shares, derivatives and even currency.

“Your broker account can be used to buy foreign blue chips — Apple, Google, Bank of America etc. — on the St Petersburg Exchange, as well as Russian ETFs, US Dollars of Euros on MICEX”, says Kuznetsov, adding that forex and foreign trading floors are excluded from IIA options.

IIA cash may be deposited in banks through a trust management agreement.

You are free to buy nothing at all, safekeeping the cash all the way and get a tax rebate — but there is little sense in doing so. Depositing 400 000 roubles for three years and getting back 13% each time, you get an average yield of 5.2% p.a., say Investfunds experts. This is far below bank deposit rates, which are insured to boot. You may go for adding interest to the rebate: AM can place up to 100% IIA assets in deposits, including foreign currency. In any case, the investor loses the insurance: deposits made by private individuals through trustees are not eligible for Deposit Insurance Agency protection, warn asset managers.

Since an investor can only have one IIA, he has to choose between a broker and an asset management company. Those who want to trade, choose brokers, those who prefer to shift responsibility for investment decisions to professionals, choose AM. Also, there are differences in broker and trustee IIA terms.

Broker account money cannot be deposited in banks and may be invested only in listed fund shares. Other funds are available via trustee account only, and you have to open it with a third party — AMs are not allowed to invest trust account money in their own share investment funds.

Safekeeping fees for IIAs are practically on par with other accounts.

Also, the lifespan of an IIA opened with a broker starts at the moment of account opening, even if no money has been deposited, whereas for Asset Managers the clock starts ticking when the money rolls in, Krekoten says. Thus the minimum activity period for broker IIA accounts may be actually reduced to 2-plus years instead of three, if you open an empty account at the start of the year and deposit cash at the year-end.

Brokers, banks with broker licenses and asset managers are not forced to open IIAs. Many market participants are merely getting ready to roll out this product, including VTB24 and Raiffeisen Capital.

Some companies already implement IIAs, offer package products and introduce special terms. For instance, Otkrytie Brokerage offers three types of IIAs depending on investor’s predisposition for unassisted trading on the exchange, as well as five trust management strategies.

Brokers set no additional fees for IIAs.

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