Positive changes in budget bill to ensure stock market growth

December 25, 2021 - 12:29

TEHRAN – The government has applied several new changes in the national budget bill for the next Iranian calendar year (begins on March 21, 2022) which according to experts and analysts will ensure the stock market’s stability and growth in the coming years, IRNA reported.

Reducing taxes on production units active in the stock market, strengthening the Capital Market Development and Stabilization Fund, eliminating subsidized foreign currency allocations, and stabilizing the ownership interest of the mines are some of the measures considered in the budget bill to support the capital market.

Allocating a 20-percent tax on legal entities is considered in next year's budget bill which is less than the previous years. Reducing the taxes imposed on production units will make them more profitable and therefore their performance in the stock market will improve.

Also, the direct taxes collected from production nits is expected to be injected into the Capital Market Development and Stabilization Fund in order to be used to improve and develop the market.

Based on the next year’s budget bill, no subsidized foreign currency will be allocated to special entities to import certain goods. Experts and analysts believe that this decision is going to have a very positive impact on the stock market since it will prevent rent and unrealistic pricing.

The draft of the national budget bill also indicates that the government will be less reliant on the stock market to compensate deficits and fund various development projects which is another positive aspect of the mentioned bill since the stock market will be less affected by the politics and will follow a normal trend created by supply and demand.

Earlier this month, Market Analyst Peyman Hadadi had said that the national budget bill for the next Iranian calendar year indicates that the government has a more positive view of the market for the upcoming year.

According to Hadadi, the allocation of a separate budget for the Capital Market Development and Stabilization Fund shows that the government is taking the necessary measures to provide stronger support for the market and to ensure its growth in the future.

“The allocation of a budget line for the Capital Market Development and Stabilization Fund is considered one of the most important points of the [Iranian calendar year] 1401 budget bill,” Hadadi said.

The expert also pointed to the imposition of tax on rival markets including the housing market as another important and influential change in the next budget bill and said: “Taxation of luxury cars and expensive housing, along with taxation of bank deposits of legal entities, is also one of the important issues that should be appreciated about the budget bill.”

He also mentioned the elimination of subsidized foreign currency allocations and noted that this would create huge changes in the market and will be the starting point for some positive progress in some industries active in the market.

The elimination of subsidies on foreign currency is not only beneficial for the country's macro-economy but also has a positive effect on the capital market transactions, the analyst said.

He further pointed to the reduction of taxes on manufacturing companies and added: "The important action of the government in reducing the tax on production units from 25 percent to 20 percent will largely offset the increase in energy costs."

EF/MA

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