The tax treatment of capital gains has occupied a significant role on the agenda and in discussions on tax reforms in western economies over the last decade. This research analyzes the tax effect of the year-end close, which creates an incentive for investors to keep assets with equity increases, which in other case they would sell, and to sell assets with equity losses that in other cases they would not. The study also provides a simulation exercise of the quantitative effect of the year-end tax close and a recommendation for tax policy to prevent the effect of reducing the level of competition in the mutual fund industry