TEHRAN- During an open session of the parliament on Wednesday, the Iranian MPs approved the general outline of capital gains tax (CGT) plan.

As reported, the parliament’s Economic Committee’s report on the mentioned plan was discussed and approved in the session.

The recent shift of liquidity from production to the unproductive markets in Iran has caused high inflation and damage to some industries in the country.

As many experts believe, the imposition of capital gains tax is the only way to exit the liquidity from the unproductive markets and lead it to production.

As defined by the Investopedia, capital gains tax is a levy assessed on the positive difference between the sale price of the asset and its original purchase price. Long-term capital gains tax is a levy on the profits from the sale of assets held for more than a year. Short-term capital gains tax applies to assets held for a year or less, and is taxed as ordinary income.

While CGT prevents the wealth to be owned just by a few people, it leads the liquidity toward production, and help re-distribution of wealth and income in the society.

It was in the middle of the Iranian calendar year 1391 (March 2012-March 2013) that economic officials apparently thought of passing a capital gains tax law.

MA/MA