Studying the Mechanism of Stimulating Investment Using Taxation of Industrial Companies of Islamic Republic of Iran

The Islamic Republic of Iran amended tax law in 2001. The present study investigates the issue that whether amending tax law was effective on increasing investment industrial sector of Iran or not? Therefore, by referring to Tehran Stock Exchange Organization as representative of industrial sector in Iran and gathering required financial information from 2005 to 2009, we use F statistics and Hausman test and conclude that regardless of the conditions before amending tax law and introducing tax exemptions at manufacturing sector, enacting the new law does not play key role for determining investment rate and other factors such as banking interest rate, growth rate for housing prices and etc. are more important. Thus, based on fluctuations at economic factor and stability strategy for accumulating tax factors, it is recommended to conduct financial policies of Iran through running a stabilization period and complementary studies.