UPDATE 1-Russia mulls tax breaks for securities investors

(Changes sourcing, adds details)

By Yelena Fabrichnaya

MOSCOW, March 7 (Reuters) - Russia's financial markets watchdog (FSFR) plans to abolish taxes on income from investment in domestic securities for individuals and stock market participants, a document obtained by Reuters on Friday showed.

The draft strategy for the development of Russia's stock markets to 2012, aimed at turning Moscow into a global financial centre, includes proposals to abolish income tax for individual investors and profit tax for brokerages and investment banks.

The current rate of income tax for individuals is 13 percent, and the corporate profit tax is 24 percent.

Russia's stock market is the world's 12th largest by total capitalisation, currently at $1,350 billion, but the number of freely floated stocks is small. The strategy says Russia should become the fifth-largest stock market in the world by 2020.

The document calls for legislation to facilitate issuance of asset-backed securities and derivatives, and for the adoption of a code of professional behaviour to prevent insider trading.

The strategy sees stock market capitalisation at 130 percent of gross domestic product in 2012, and at 140 percent of GDP by 2020 with an annual $125.4 billion of initial public offerings.

The document is being discussed with stock market professionals and has yet to be approved by the government. The FSFR lost much of its political clout after the departure of its influential head, Oleg Vyugin, last year.