Majlis Research Center: Capital gains tax is necessary to curb speculation in the economy

According to Fars News Agency, the Majlis Research Center has reviewed the plan of capital gains tax in a report.

The summary of this report states: Speculative demand, along with other factors such as liquidity growth, is one of the factors that cause price fluctuations in the market of assets such as housing, cars, gold and currency. These price fluctuations create uncertainty on the one hand and increase the price on the other hand, disrupting the process of economic activities and causing problems for people’s consumption demand.

In order to limit speculative activities, as well as to observe justice and support productive activities, it is necessary to impose a tax on capital gains. The regulatory tax on capital gains is one of the tax bases that has been implemented for a long time (more than 100 years) in many countries and is used in at least 142 countries in 2021 and is expected to solve the stated problems. By imposing this tax, price fluctuations caused by speculation will be reduced.

Since in the capital gains tax system, tax obligations are imposed on natural persons in addition to legal entities, it is necessary to use extensive exemptions, while reducing the number of taxable persons and simplifying the provincial tax process, by separating consumption needs from The demand for speculation should be prevented from disrupting people’s lives. For this purpose, in the second report of the aforementioned project, extensive exemptions have been included in order to prevent the inclusion of the consumption needs of individuals, a list of which is given below:

1- Exemption of residential properties for the number of family members (up to 4 residential properties),
2- Exemption of vehicles for the number of family members (up to 4 vehicles),
3- Exemption of 200 grams of 18 karat gold for each person every 5 years.
4- Exemption of real estate income up to the limit specified in Article (84) of the Direct Taxes Law every year in order to cover renovation costs.
5- Exemption of agricultural lands.

Also, in addition to these cases, it is necessary to provide appropriate exemptions, while preventing stagnation, to provide the basis for capital transfer from the gold, housing, automobile and currency markets to the production sectors. For this purpose, in the report of the Economic Commission, the following are included in this regard:

1- Not including the stock market,
2- Exemption from the sale of newly built properties,
3- Exemption of all types of assets related to business activity
4- Postponement of income tax on real estate related to economic activity in case of replacing the property.
5- 70% exemption for business persons in sparsely populated cities.
6- Deduction of tax on declared income and the cost of salaries and benefits paid, from real estate capital gains,
7- Tax discount up to 100% for commercial-industrial and special economic zones.

If the buying and selling of assets is done by official and licensed companies, while making these activities regular and transparent, it will increase the liquidity of assets in the economy. Exemption of capital gains for assets related to business activity is also included for the same purpose.

These companies are required to pay taxes on their performance regarding the income from the purchase and sale of assets, and in this way, along with the transparency of the performance of these economic units for governance, tax justice is established between these activities and other economic activities.

Another important point in the design of capital gains tax is the implementation platform necessary to obtain this tax base. The minimum information required for the imposition of capital gains tax is: information on the purchase price, sale price and asset holding period. Considering the high number of natural persons subject to capital gains tax, the implementation of this tax relying on human factors (tax auditor) is not only not desirable but also practically impossible and it is necessary to carry out this process in a systematic way.

Also, in the design and implementation of tax laws for natural persons, the duties of taxpayers should be in such a way that the aforementioned duties can be easily performed by all persons with any level of knowledge and skills and in any part of the country; If these cases are not included in the design of the implementation platform, this law will lack social acceptance and will face a serious challenge in practice. For this reason, in this plan, the tax duties are not directed directly to the taxpayers, and these are the official transaction registration authorities who must send the information related to the transactions to the Tax Administration.

This approach, which is known as “registering transactions through third parties”, while facilitating the tax process for the taxpayer and the tax administration, eliminates the relationship between the taxpayer and the tax auditor. For example, in the transaction process of a residential house, the buyer and the seller do not see any changes compared to before, and it is the notary office (third party) that must send the relevant form or electronic invoice to the tax authority when transferring the property. .

Finally, in order to ensure the registration of all relevant transactions and to prevent tax evasion, the Tax Organization, with the intersection of information obtained from third parties (financial event information) and information related to bank transactions (payment system) to identify cases of non-compliance Compliance acts as “incidental income”. By imposing a tax on incidental income and considering the exemption limit for it, individuals will not benefit from doing non-transparent transactions and will not have the incentive to evade taxes.

In addition to providing the possibility of taxing capital gains and reducing speculation, by creating economic transparency and preventing tax evasion, the implementation platform of capital gains tax has other achievements, which are briefly stated below:

1- Smart provincial tax and elimination of the relationship between the taxpayer and the tax auditor: in the approach of providing services to taxpayers by third parties, the duty of reporting information on taxpayers is the responsibility of third parties and not taxpayers. Based on the information reported by the third parties, the tax affairs organization prepares the default declaration and sends it to the taxpayers for confirmation, correction or completion. This approach, by eliminating the relationship between the auditor and the taxpayer, reduces the level of conflict between the tax affairs organization and the taxpayers.

2- Creation of the necessary executive platform for tax on total income: The executive platform of capital gains tax, through creating economic transparency and identifying the acceptable incomes and expenses of individuals, practically provides the possibility of calculating the total income and levying tax on the total income. The total income tax system, based on the total income of individuals, will increase tax justice and reduce the class gap.

3- Reducing tax evasion and increasing the government’s tax revenue: the executive platform increases economic transparency by producing and collecting financial event information and matching it with the payment system. Also, due to the taxation of incidental income, the use of personal accounts instead of business accounts will not benefit people, which will reduce tax evasion in this way and increase the government’s current income.

4- Anti-trafficking: Since the transactions related to the first supply of contraband goods are not registered by any third party, the resulting amounts are subject to incidental income tax and the profit from smuggling is reduced. Also, by identifying people with significant incidental income as high-risk individuals, relevant authorities such as the Anti-Trafficking Headquarters will be able to investigate these individuals more closely.

Considering the importance of the issue of capital gains tax, it is necessary to explain its various aspects well before implementation.

According to Fars report, the full text of the report of the Majlis Research Center on the capital gains tax plan from Here It is visible.

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