The HM Revenue & Customs has launched a two week consultation period to determine whether it should revoke the Moscow Exchange’s (MOEX) status as a recognised exchange, removing investors’ ability to access UK tax benefits when trading securities on the bourse.
Britain said the move was in response to restrictions the Bank of Russia has placed on foreign investors, citing a Feb. 28 ban by MOEX which prevented brokers from selling assets at the instruction of non-Russian residents.
The UK government and other western allies are also searching for new ways to increase pressure on Russia as the war continues, targeting wealthy elites and key industries as well as trying to cut off access to the international financial system.
“Revoking Moscow Stock Exchange’s recognised status sends a clear message – there is no case for new investments in Russia,” Britain’s Financial Secretary to the Treasury, Lucy Frazer, said in a statement.
The tax authority said, “HMRC intends to take these actions alongside the sanctions that the UK is placing on Russia because of the illegal war on Ukraine. HMRC has acted in the interests of all those who value fair and open trading on global stock markets.”
Britain grants recognised status to some exchanges, which allow the securities traded on them to benefit from specific tax reliefs. While existing investments through MOEX would be unaffected, new ones would not benefit if its status is revoked.
Moscow’s stock market has lost 40 % of its value this year in local currency terms since Russia’s invasion of Ukraine. This leaves it on track for the worst annual run since the global financial crisis in 2008.
The UK, US and EU have imposed a swathe of severe sanctions on Russia, its biggest companies and dozens of individuals in the wake of the war to stranglehold the economy. To date though despite a recession looming and inflation approaching 20%, the country has defied the most dire forecasts thanks to stringent capital controls and bountiful petrodollars.
However, all eyes are on whether the country will default on its debt for the first time since 1998 after the US stopped banks from handling dollar bond payments from Russia.
Russia’s central bank said it was considering legal action over western governments freezing nearly half of its foreign exchange reserves.
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