Investigating the Impact of Value Added Tax (VAT) on Iran's Current Account: Usage of Computable General Equilibrium Model (CGE)

The purpose of this paper is Investigating the Impact of Value Added Tax (VAT) on Iran's Current Account. To do this, Computable General Equilibrium Model (CGE) is used. Data is based on the latest social accounting matrix (SAM) of Iran in 2011, which is provided by Islamic Parliament Research Centre of Iran in 2015. Policy analysis has been carried out in the form of nine scenarios: the VAT with the rates applied in Iranduring the years 2008 to 2019 (3%, 4%, 5%, 6%, 8% and 9%) and the applicable rates (10%, 15% and 20%). In all scenarios, the VAT rate in agriculture sector is considered zero. The results indicate that VAT has positive impact on Iran's export and import, but negative impact on current account. Likewise result of sensitivity analysis show the high precision of the research model and confidence of policy analysis’ results.