The government began to think about how to increase the number of initial offerings (IPO) of shares on Russian stock exchanges. The Ministry of Economic Development is working out several proposals based on tax benefits, writes Forbes.
Despite the booming IPO in the world – only 480 companies entered the US stock exchanges in 2020, the process is practically not going on in Russia. There are no prospects for improving the situation without intervention.
The distrust of business is evidenced by the fact that last year only two Russian companies carried out their IPO at the Moscow Exchange – the developer Samolet and the state-owned company Sovcomflot. Seven more companies were listed in addition to the international one.
To start the process, officials, for example, want to exempt retail investors who sell shares purchased during the IPO or within a year after it from paying personal income tax (PIT). Exemption from personal income tax or income tax is offered for existing shareholders, if they sell their stakes at the time of placement. However, on one condition, they must own the securities at least one year before the placement.
In relation to the companies themselves, the ministry proposes to reimburse the costs of analytics, marketing to investors, obtaining a credit rating and other expenses associated with preparing for the initial public offering. Compensation can be realized in the form of subsidies or tax deductions.
Discussion of such measures was confirmed by a federal official, a source in the government apparatus and a source in the stock market. Preliminary, they should come into force in the fourth quarter of 2022, but there are no general decisions on them yet.
Denis Zaitsev, a lawyer of the People of the Deal Bar Association, noted that the initiatives look reasonable and will create conditions for investment growth, but they will not lead to a breakthrough. In addition, he recalled that there are many pitfalls that will reduce the benefits of the proposal. In turn, the head of the National Association of Stock Market Participants (NAUFOR) Alexei Timofeev noted that he supports measures to stimulate IPOs, but the main obstacle to IPOs in Russia is the entrepreneurial climate, and it cannot be corrected with tax incentives.
Earlier, the President of the country Vladimir Putin at a meeting on measures to increase investment activity said that it is better for domestic business to invest “in a house” so that everyone is calmer and safer.