The law on speculation and gambling tax will be implemented in 2027. This law is designed to reform speculative behaviors and direct resources towards productive activities.
The Role of Capital Gains Tax
Hamidreza Salali, an economic researcher, has examined the importance of this law and states that under current conditions, the profit from short-term buying and selling of assets can be more attractive than investing in productive sectors. For this reason, the Capital Gains Tax or CGT has been introduced as a tool to rectify this situation. The aim of this tax is to shift the tax burden from productive activities to profits derived from unproductive transactions.
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Impacts on Markets
Evidence shows that asset markets in Iran, especially housing and gold, are highly attractive due to price volatility and the preservation of money value. The increase in the number of vacant houses and gold transactions indicates a portion of capital is trapped in unproductive assets. The law on speculation and gambling tax seeks to increase the cost of speculation and reduce frequent transactions in these markets.
Implementation Conditions and Tax Rates
This law was communicated from the parliament to the government on 08/04/1404 and a 20-month period has been allocated for its implementation. Tax rates for properties and assets are determined progressively, starting at 40 percent in the first year and gradually decreasing. Similar rates have also been set for vehicles and precious metals.
Given the economic conditions of the country, setting deterrent tax rates is very important. If these rates cannot stop speculative transactions, inflation may rise. Therefore, the success of this law depends on the accurate registration of ownership and data transparency.
The Capital Gains Tax should be considered as part of economic reform programs. If it can reduce profits arising from turmoil in asset markets, it can be directed towards strengthening production and infrastructure. Otherwise, negative consequences such as increased inflation and capital flight are likely to occur.
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