Increase in stock market trade has created a source of tax revenue for the government, the top tax official in Tehran said.
According to Omid-Ali Parsa, head of the Iranian National Tax Administration, tax on share trade generated 130 trillion rials ($560 million) since the beginning of current fiscal year last March.
Tax income in this category was more than 450% higher than the projected 23 trillion rials ($100 m) in the March 2020-2021 budget.
Known as financial transaction tax (FTT), tax on stock is levied on buying and selling a stock, bond, or other financial contract like options and derivatives.
As per rules, the tax on stocks deals is equivalent to 0.4% of the total value of the trade. "Tax on stock deals will not increase in the next fiscal year (March 2021-22)", ISNA quoted Parsa as saying.
The higher FTT has whetted government appetite as it has raised forecast for next year. In the proposed 2021-2022 budget bill it expects to collect 141.6 trillion rials ($615m) in tax on share trade.
The growth in stock trade up until mid-2020 after which the market plunge began, was largely due to the deluge of neophyte investors.
Total trade in Tehran’s capital market (one of the best performing) reached 34,645 trillion rials ($150 billion) in the nine months ending last December.
Tax on shares is different from capital gains tax that is commonly levied on share profit. The government has denied the likelihood of levying capital gains tax on share profit.
While tax earnings from stock gains could potentially be a relatively good source of income for the government struggling with deficit spending for years, there are fears that if a capital gain tax is announced investors will exit the bourse and explore other lucrative markets.
INTA statistics show the government earned 1,314 trillion rials ($5.7b) in tax in the eight months to Nov. 20 accounting for 64% forecast in the budget.
Tax revenues include tax on legal entities, income tax, wealth tax, import duty and tax on goods and services. Total tax earning as per the proposed March 2021-22 budget has been doubled to 2,515 trillion rials ($10.5b).
