Tehran – In a public session of parliament on Wednesday, Iranian MPs approved the outline of the Capital Gains Tax (CGT) plan.

As indicated, the report of the economic committee of the parliament on the mentioned plan was discussed and approved during the session.

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

As many experts believe, imposing capital gains tax is the only way to get liquidity out of unproductive markets and drive it into production.

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

While the CGT prevents wealth from being owned by only a few people, it drives liquidity into production and contributes to the redistribution of wealth and income in society.

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

MOM