Iran's President Mahmoud Ahmadinejad says he will delay the implementation of the value added tax (VAT) mechanism for at least one year.
President Ahmadinejad said on Monday that he would introduce a new bill that would extend a proposed two-month delay in the implementation of the new tax system to one year.
Ahmadinejad made the remarks after the VAT faced widespread criticism from business people in large cities.
The protests began in early October when jewelers closed their shops in the central city of Isfahan. Traditional bazaars in a number of cities including Tehran and Tabriz also closed in protest against the measure.
The move resulted in pushing the government to announce that it will review the mechanism and President Ahmadinejad in a directive to the finance minister, called for suspending the mechanism for two months.
The bazaar, the backbone of Iran's traditional economy, has demanded that the Iranian government permanently suspend the new tax system, claiming that VAT would contribute to the country's rising inflation.
This is the first time that VAT is introduced in Iran. Prior to the legislation, the government imposed sales taxes on the total value of goods and services.
Under the new VAT policy, businesses would have to pay the government three percent of their sales receipts. The measure is meant to lower inflation, but it has already sparked fears of further price hikes.
... Payvand News - 10/21/08 ... --