Economy, Business And Markets

Ex Post Facto Law Will Harm Depositors

Ex Post Facto Law Will Harm DepositorsEx Post Facto Law Will Harm Depositors

Taxing the deposits of unauthorized credit institutions would greatly help restore discipline to the financial system, but imposing tax on deposits that go back five years is open to debate, a business and finance expert told IRNA on Saturday.  

An amended tax law has made it mandatory for all unofficial credit institutions to levy taxes on their deposits. The National Tax Administration has said if the administration could have access to information on deposits with the uncertified lenders, it would impose taxes on deposits made five years ago.

Shahin Shayan Arani said, "The question is why should someone who has put money in a credit institution five years ago must now pay the price for the central bank’s abject failure to restrain the activities of uncertified credit and financial organizations"

He said that an ex post facto tax law, which permits retroactive legislation, will result in loss for depositors who opened their accounts before the enactment of law. So the Central Bank of Iran and the Ministry of Economic Affairs and Finance must announce a deadline after which tax will be imposed on interest paid to deposits with unlicensed credit and financial institutions, letting the people decide on their own whether or not they want to keep their money with the controversial institutions.

The expert opined that levying taxes on deposits with the unruly institutions is fair enough because they are not licensed by the CBI and thus not eligible for tax exemption. "Consequently, they must be excluded from the benefits and privileges granted to certified credit institutions that uphold local and international norms, laws and standards."

He called for the prosecution of the persecution of unapproved lenders who do not comply with CBI rules and offer extortionate interest rates as high as 27%. Arani appealed to Economy Ministry to take the initiative and in dealing with such institutions and regulate the activities of all financial bodies.