Economy, Business And Markets

Tax Scrutiny Will Not Affect Bank Deposits

Tax Scrutiny Will Not Affect Bank Deposits Tax Scrutiny Will Not Affect Bank Deposits

A local analyst has warned about the adverse consequences of money outflow from banks if tax authorities gain access to depositors’ accounts, IRNA reported on Monday.

“Account holders of large deposits are not concerned about the inspection as they know how to evade taxmen. They have connections in the right places,” said Mohammad Gholi Yousefi, a lecturer in Allameh Tabatabaie University.

He allayed concerns by critics on the likely outflow of money from bank accounts over fear of tax scrutiny and said, “There is no better place than banks to earn profit in the short run.” However, he warned that if this happens, most deposits could land in other attractive markets, namely foreign exchange, gold coin, housing or stock exchange or other markets with quick returns. Fearing a rise in speculative activities, Yousefi called on the government to take preventive measures.

It appears that the administration is seeking to encourage investment in the manufacturing sector by tightening tax regulations. However, depositors also have their own interests in mind just like the banks, and may decide not to withdraw their bank deposits, he said.

In late August, President Hassan Rouhani directed the Economy Ministry to amend the direct tax law authorizing the Iranian National Tax Administration to create a database that would include information on identity, transactions and finances of taxpayers.

The database will comprise information on identity—residence, commercial permits, transaction data—purchase of goods and services, import and export data, commercial and service contracts, foreign exchange and precious metals trading, insurance premiums and claims details, and bills of lading, financial records—annual turnover of securities, bank account turnover and year-end balance, and  turnover savings account information.

Half of the Iranian economy is avoiding the taxman, including many state-affiliated organizations. They either do not provide their accounts books or falsify financial records. Proponents of the president’s order argue that the administration is trying to target the errant companies and individuals, to make it hard for them to evade taxes.