UNHAPPY WITH THE PROPOSAL OF THE MINISTRY OF FINANCE Stock market investors are trying to avoid the advance payment of capital gains

Stock market investors are unhappy with the way the Government wants to tax their capital gains, and they have negotiated a modification of the part of the amendment to the Fiscal Code proposed by the government, which concerns the taxation of capital gains.

The draft emergency ordinance in question provides that brokers would withhold an advance tax of 10% of their clients" capital gains every month, while the annual tax rate for capital gains has been set at 16%, regardless of the holding period.

"Following the discussions in the Social Dialog Commission of the Ministry of Finance, its officials said that they would review again the provisions of the emergency ordinance and that they would provide an answer by October 25th", said Dumitru Beze, the chairman of the Association of Stock Market Investors, who added: "Our goal is to eliminate the advance tax withholding, but we would settle for an advance tax withholding of 1% ".

Right now, each investor needs to calculate and pay quarterly an advance tax of 16% of the net capital gains.

The emergency ordinance draft amended the aforementioned provision, by having brokers withhold in advance a 10% tax on capital gains every month, with the settlement to be made at the end of the year.

Prior to the amendment of the tax code which was implemented on July 1st, the tax on stock market transactions was 1% for gains made by selling stock which had been held for more than a year, and 16% for capital gains on shares held less than a year.