Central Bank of Iran Says Will Pay Tax Only on Realized Profit

EghtesadOnline: In the wake of a single urgency bill approved this week by the Majlis to tax the income of the Central Bank of Iran, the bank issued a statement late Monday, indicating that the legislation comes with “ifs and buts”.

News ID: ۷۴۶۶۴۶

06 February 2019

Despite vehement opposition from the CBI, lawmakers passed a measure on Sunday obliging the CBI to pay "50% of its profit and preliminary tax until February 4" to the treasury.

Abodolnaser Hemmati, the CBI governor met with lawmakers last week and seemingly was able to dissuade them from passing the measure after telling them that that would fuel inflation by creating new liquidity.

"If the measure is approved the CBI will have to pay tax on unrealized profit," Hemmati told the lawmakers, according to Financial Tribune.

In the statement the CBI reminded the public that the bill will not become law until it is approved by the constitutional watchdog the Guardian Council.

Secondly, it said that it will pay taxes only on "realized profit" and thirdly, that it will try to allocate more foreign currency to applicants in the coming weeks to be able to pay the tax as mandated by the legislature.

The Persian-language newspaper Donya-e-Eqtesad reported on Thursday that the signal to sell more currency in the coming weeks was interpreted in two ways by market observers.

One is that foreign exchange rates would fall because the CBI would pump more currency into the market;  the other is that because the CBI needs more profit, it could decide to jack up forex rates.

It seems that the second group had the upper hand on Tuesday as the US dollar was traded for 117,500 rial up from 116,500 rials the previous day.