BUSINESS

Bond turmoil forces gov’t to revoke tax

The Finance Ministry is scrambling to abolish a regulation concerning a retroactive capital gains tax on Greek bonds held by foreigners, following the impact on Greek debt in the market.

Reports say that in view of sovereign bonds’ soaring yields this week, the ministry intends to cancel the regulation as soon as Parliament reopens after the European elections and is seeking a formula for the best way to do that.

The regulation provided for a tax of between 20 and 33 percent on capital gains that foreign investors reaped from Greek bonds in the 2012-13 period. When the regulation became widely known via a ministry circular, bond yields started to climb rapidly earlier this week.

The ministry issued a statement on Thursday that revoked the circular, in effect rendering the regulation null and void, but this did not appear sufficient to appease investors on Friday, as the 10-year bond yield jumped to 6.96 percent.

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