Domestic Economy

Tax Reforms Will Target Capital Gains, VAT

Tax Reforms Will Target Capital Gains, VATTax Reforms Will Target Capital Gains, VAT

Capital gains tax should be an independent part of government income and should be included in the national taxation system, Minister of Economic Affairs and Finance Ali Tayebnia told reporters on Tuesday.

The announcement comes as the government recently announced changes it made to the direct taxes law. Tayebnia said that the capital gains tax should be independently defined in the comprehensive taxation reform plan, which has been recently put into effect after being formulated by a team of experts at the economy ministry.

“We have provided the technical requirements for applying capital gains tax to all types of property, and the new taxation system is now in force,” he added.

The first proposal for amending the capital gains tax collection method was incomplete, Tayebnia said. “That’s why some departments and agencies, including the ministry of roads and urban development, raised objections to it. As a matter of fact, we at the economy ministry did not agree with the draft proposal either.”

Asked about the possible impact of capital gains tax collection on the housing prices, Tayebnia said, “Yes it will. I believe that there is no difference between assets when it comes to taxing, whether it’s a house or it’s gold or foreign currency. So, all property owners and investors should pay the capital gains taxes applied to their assets.”

“In tax collection, neutrality is the main principle and all areas should become subject to it and income tax is not deductible.”

“If we reject speculation for the housing market, we should also certainly ban it for other types of assets.”

Elsewhere in his speech Tayebnia said cutting off dependence on oil plays an important role in the resistance economy and that financial discipline encompasses economic development.” An efficient tax system can help attract foreign investment into the country and, therefore, result in acceleration of the economic recovery,” the minister stated.

 VAT Reforms

The deputy director for Iran’s National Tax Administration announced changes made to the process of valued added tax collection for taxpayers.

“If taxpayers refuse to pay their VAT, we would have to apply tax deductions to their total income,” Alireza Taribakhsh said. “Value added tax is a consumption-based tax and does not apply to the taxpayer’s resources.”

He said that household goods like rice, wheat, sugar, meat, and cooking oil are subject to value added tax exemptions.

Presently, customs offices receive value added tax from importers. Taribakhsh said that no extra taxes will be imposed on importers if the imported goods are included in the production chain.

“So far, more than 452,000 taxpayers have submitted their declaration forms to INTA ,” he said.

The tax authority has amended the existing VAT law, which expired last week 5 years after it was enforced by former president Mahmoud Ahmadinejad. “We have compiled the proposed changes and sent them to the ministry of economy. We hope that the new draft VAT bill will be ready to be submitted to the parliament in the next two months,” Taribakhsh stated.