Share This Article:

A Simplified Approach for Implementing Capital Gain Tax in Stock Marketing

Full-Text HTML XML Download Download as PDF (Size:1250KB) PP. 868-892
DOI: 10.4236/ojapps.2016.613076    544 Downloads   681 Views  


The sustainability of a country inevitably depends on proper taxation system. To date, there are many taxes implemented by the ruling authorities of a country. The taxes that are sourced from stock markets or share markets are paramount to better govern a country. The capital gain tax (CGT), which is incurred in disposing the shares or stocks owned by an investor or an institution, is one of the taxes implemented in stock markets. Though in the past many attempts have been made to properly streamline the CGT, the methodologies or the approaches used in the implementation of CGT, even in the United States, are not well-grounded from a scientific point of view. Therefore, in this paper, a simplified approach based on the assumption that the CGT is implemented on a yearly basis is proposed. The CGT is calculated for each stock owned by an investor or an institution. The approach is implemented using an open access platform: AMP (Apache-MySQL-PHP). Subsequently, the proposed approach is tested using some hypothetical data. The proposed approach, which is easy-to-use, practical and un-biased, is of use to any country that is willing to progress towards the sustainability. Moreover, the proposed approach with the current technology will enhance the developing nations which have large size of informal economy, on designing and implementing effective tax policies and administrations.

Cite this paper

Mylevaganam, S. (2016) A Simplified Approach for Implementing Capital Gain Tax in Stock Marketing. Open Journal of Applied Sciences, 6, 868-892. doi: 10.4236/ojapps.2016.613076.


[1] United Nations Development Programme (2015) Human Development Report 2015: Work for Human Development. Oxford University Press, New York.
[2] Bird, R.M. (2015) Improving Tax Administration in Developing Countries. Journal of Tax Administration, 1, 23-45.
[3] Bird, R.M. and Zolt, E. (2008) Technology and Taxation in Developing Countries: From Hand to Mouse. National Tax Journal, 61, 791-821.
[4] D’Ascenzo, M. (2015) Global Trends in Tax Administration. Journal of Tax Administration, 1, 81-105.
[5] Ballard, C., Fullerton, D., Shoven, J.B. and Whalley, J. (2003) The Relationship between Tax Rates and Government Revenue. University of Chicago Press, Chicago.
[6] Lo, M. (2015) A Study on Lock-In Effect of Capital Gains Tax for Securities in Taiwan Stock Market—An Application of DID Model. Modern Economy, 6, 954-964.
[7] Capital Gains Tax (2016).
[8] Tax (2016).
[9] Minarik, J.J. (2008) Taxation: The Concise Encyclopedia of Economics. Library of Economics and Liberty.
[10] Clemens, J., Lammam, C. and Lo, M. (2014) The Economic Costs of Capital Gains Taxes in Canada. Fraser Institute.
[11] Capital Gains Tax in the United States (2016).

comments powered by Disqus

Copyright © 2017 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.