An expert believes that the correct implementation of capital gains tax law could eliminate brokers from the car market and benefit real customers, but the passage of the law alone cannot solve the automotive industry’s challenges.
Some experts, however, believe that at a time when inflation has crossed 50% and the foreign exchange market remains highly volatile, this law cannot restrain the car market brokers.
According to Daryoush Badiee-Sabet, a trade expert, the capital gains tax in the car and housing markets can cause brokers to leave the automotive market, but the question is whether this law will benefit low-income deciles in the current economic condition, the Persian automobile daily Donyaye Khodro reported.
“The government has decided to implement the capital gains tax law this year to abolish brokers from capital asset markets such as housing and automobiles. This plan aims to prevent money laundering, establish order and predictability in the market, reduce price fluctuations and prevent tax evasion,” he said.
“However, if this law is implemented incompletely, say when prices are registered lower than real transactions, or the amount of tax is added to the price charged to buyers, it will increase prices in the car market.”
The expert noted that people over the age of 18 who own only one vehicle are exempt from the capital gains tax if the period of car ownership is more than a year.
Referring to the capital gains tax law pertaining to vehicles, he said, “As per this law, if a customer sells their car within three years of taking delivery of the car, they must pay 10-30% of the sale’s profit as tax,” he said.
“Although in the case of emergency sales, it may be unfair to owners, but in general, if the law is implemented correctly, it can eliminate brokers from the market. In the long term, it may also change the status of cars in the domestic market from capital goods to consumer goods.”
Some experts believe that the decline in the number of applicants in the car registration portal compared to car lotteries is due to the capital gains tax law.
When asked if this issue is correct, Badiee-Sabet said the capital gains tax law, which was presented in the form of a government bill about three years ago and approved by the parliament, is still awaiting the approval of Guardians Council.
He added that even if it’s approved, its implementation prospects are unknown, so it cannot affect the vehicles registered in the portal.
“The decline in the number of applicants is actually due to the condition of depositing and blocking 1 billion rials in the proxy account. This condition led to a drop in the number of applicants who are not willing to liquidate their possessions, such as gold, motorcycles, etc., or sell the car that they are using, unless they are sure of a definite delivery within a maximum of three months,” he said.
“This is because if they fail to buy a car with a fixed price and quarterly delivery, they may not even be able to buy the same amount of gold or other product they sold with the money blocked in the proxy account during the execution of the sales plan.”
The expert noted that people should not expect miracles from this law.
Stressing that the troubles of the automobile market will not disappear with a single law, the expert said there is a concern that the tax will be added to the car price, which will be to the disadvantage of buyers from lower income deciles, hence officials should pay more attention to the plan’s implementation.
Badiee-Sabet concluded that the mode of implementation and future inflationary conditions will determine the success or failure of the capital gains tax law.
