Tax on stock and share trade reached 16.2 trillion rials ($52 million) in the first quarter (March 20-June 21) of the current fiscal year, posting 74% increase on Q1 of last year.
Also known as financial transaction tax (FTT), tax on stock deals stood at 9.312 trillion rials ($30m) in the first three months of last year.
FTT income reached its highest in the second calendar month ending May 21 at 6.01 trillion rials ($19m), the Central Securities Depository of Iran said.
Tax on stock is levied on the purchase and sale of stocks, bonds, or other financial contracts like options and derivatives.
Tax revenue includes returns from “direct taxation” and “tax on goods and services”. Direct tax comes from three groups of “legal entities”, “income tax” and “wealth tax”. Tax on stock trade falls under the wealth tax category.
Tax on stock trade is 0.5% of the total value of a deal. The tax is different from capital gains tax that is commonly levied on share profit. The government on multiple occasions has denied the likelihood of levying capital gains tax on share profit.
Given the deep recession plaguing the share market in the past two years and the government struggling to bolster the bourse, tax rates are apparently not expected to increase in the near future.
As per the 2022-23 budget, the government expects to earn 104.2 trillion rials ($336) in income from taxing stock trade.
The government says it wants to use tax revenue from share trade to invest in the share market in the framework of its declared support measures to revive the bearish stock market.
Income from tax on trading shares will be injected into the Capital Market Stabilization Fund, which is designed to help resolve the liquidity crunch in the stock market, especially when selloff pressure is high and there are few buyers.
