The Majlis on Wednesday lifted a ban on taxing interest on bank deposits of legal and institutional bodies.
So far the Iranian National Tax Administration was not allowed to tax interest of bank deposits for both natural and legal clients as per the Direct Law Act.
In line with government policy to raise tax revenues, the chambers decided to tax legal depositors in the next fiscal year that starts in March 20, the parliamentary news website, ICANA reported.
Lawmakers exempted key institutions from the legislation, including the sovereign wealth fund, pension funds and insurance companies.
The National Development Fund of Iran, Iran National Innovation Fund, Central Insurance of Iran and Physical Damage Fund are some exemptions.
INTA officials have said that levying tax on bank interest of depositors and natural entities is not on the agenda.
This is because of concern that the taxing bank interest would encourage depositors to move money out of banks and, in turn, causing huge exit of money and into parallel markets, causing turbulence in the gold, forex, auto and housing sectors.
Although taxing bank deposits is common in many countries, there are fears that such a move in Iran would worsen the galloping inflation by pushing depositors to run on the banks and move to other safe havens.
The government’s projection from tax revenue has increased 62% for the next fiscal year that starts in March. The share of tax in the general budget is at 5,270 trillion rials ($20 billion).
Tax officials say they increased the tax base to augment tax revenue. In addition, they have identified 3 million new taxpayers.
Notably, for the first time, the budget calls for higher taxes on owners of cars worth 10 billion rials ($35,236) plus those owning homes worth 100 billion rials ($352,360) and above.
