Taxation in Iran
As part of the Iranian Economic Reform Plan, the government has proposed income tax increases on traders in gold, steel, fabrics and other sectors, prompting several work stoppages by merchants.
[11] Tax evaders typically are either involved in activities in the gray sector of economy or in the underground market which they do not divulge.
[citation needed] In 2014, international medias reported Iranian nationals and companies to be listed among the tax evaders in Switzerland and other offshore centers.
[citation needed] Al Khums or the Fifth of excess income paid as a form of Zakat (alms-giving), which is usually reserved for Aal-Al-Bayt, Muhammad’s Household.
The black turban of Khamenei signifies that he belongs to Imam Ali Ibn Abi Talib and Fatima’s household and being Al Wali Al Faqeeh (guardian of Islamic jurists with full control of the society's affairs) gives him the majority share of the Fifth, as was the case with Ayatollah Khomeini.
According to Article (17) has approved 2015, any estate or property left from an individual, because of his death, whether actual or presumptive, shall be subject to taxation as follows: (1) In respect of bank deposits, partnership bonds and any other negotiable papers, excluding those mentioned under Paragraph (2) of this Article, and their allocated interests, as well as dividends and partners’ shares till the date of registration of transfer to the name of the heirs and or the date when the same is paid and delivered to them, at the rate of 3%; (2) In respect of shares and partners’ shares and their priority rights, at a rate which is 1.5 times higher than the rates stipulated in Note (1) under Articles (143) and (143 bis) of the present Act, as per relevant provisions at the date of registration of transfer to the name of the heirs; (3) In respect of royalties and other properties, as well as financial rights not stipulated in the aforementioned paragraphs, at the rate of 10% of their market value at the date of delivery or registration of transfer to the name of the heirs; 1 In view of Article (2) of the Act Partially Amending the Direct Taxes Act, approved on February 16, 2002, the provisions related to the collection of the Annual Tax on Real estates (subject to the previous text of Articles (3-9), Tax on Unoccupied Residential Immovable Properties (subject to the previous text of Articles (10-11) and Tax on Undeveloped Lands (subject to the previous text of Articles (12-16) were deleted.
4 In view of Article (15) of the Act on the Organization and Support of the Production and Supply of Housing, approved on May 14, 2008, a 12 percent tax shall be applied to the transactional value of the undeveloped lands with residential use.
Taxation in Iran generates particular unease among foreign firms because they appear to be arbitrarily enforced[26] – tax bills are initially based on 'assumed earnings' calculated by the Finance and Economy Ministry according to the size of the company and the sector in which it operates.
Foreign legal entities must pay taxes on all taxable income earned through investments in mainland Iran or from direct or indirect (through agents, branch offices, etc.)
Article 132 The income declared for producing and mining activities, which is derived by non-government legal persons in producing or mining enterprises, for whom exploitation licenses are issued, or with whom extraction and sale contracts are concluded by relevant ministries as of the date of entry into force of the present Act, as well as the income derived from services delivered by hospitals, hotels and touristy residential centers, namely, non-government legal persons, for whom exploitation licenses or permits are issued by relevant legal authorities as of the aforementioned date, shall be subject to a zero tax rate for a period of 5 years beginning from the date of exploitation or extraction or activity start up.
As regards the less-developed regions, the provision shall apply to a period of 10 years.1 A) Zero-rate taxation refers to a method whereby the taxpayers in question are obliged to file returns and submit their statutory books or their accounting documents, if any, to the Iranian National Tax Administration in accordance with the arrangements and deadlines required by this Act with regards to their incomes.
E) In order to promote and increase the levels of economic investments in entities subject to the present Article, in addition to the protection period for zero-rate taxation, investments in less-developed regions and other regions shall also be supported in other ways as follows: 1) For less-developed regions: In the computation of taxes relevant to the subsequent years following the zero-rate taxation period pursuant to provisions prescribed in the present Article, as long as the aggregate taxable income is twice the registered and paid-up capital, the zero rate shall still apply but beyond that level, the due taxes shall be computed and collected at the rates prescribed in Article (105) of this Act and the Notes under it.
This provision will persist unless the aggregate taxable income of the enterprise in question equals its registered and paid-up capital, but beyond that level, 100% of the due tax shall be computed at the rates prescribed in Article (105) of the present Act and the Notes under it.
The tax incentives mentioned in Sections (1) and (2) of the present Paragraph shall also apply to the income derived from transportation activities by non-government legal persons.
If such non-government legal persons have been established prior to the present amendment, they shall be entitled to the tax incentive mentioned in this Article, if they have any reinvestment.
Moreover, producing and mining enterprises established in all special economic zones and industrial townships, except for special economic zones and industrial townships established within the 120-kilometer radius from the center of Tehran Province shall be zero-rated and shall be entitled to the tax incentives provided by this Article.
As regards the special economic zones and industrial townships or producing enterprises located within the territory of two or more provinces or cities, the criterion for making decision on the territory to which such zones or townships belong shall be stipulated in a bylaw to be approved by the Council of Ministers, within three months from the approval of the present Act, upon the joint proposal of the Ministry of Industry, Mine and Trade, the Ministry of Economic Affairs and Finance, the State Organization of Management and Planning and the Department of Environment of the Islamic Republic of Iran.
K) The list of less-developed regions, including the names of provinces, townships, counties and rural districts, shall be prepared, within the first three months of the 5-year term of each development plan by the State Organization of Management and Planning in collaboration with the Ministry of Economic Affairs and Finance and will be approved by the Council of Ministers to be applicable until a new list is approved.
The date of activity start up, as verified by relevant competent authorities, will be the basis for granting tax incentives for less-developed regions.
Government owned enterprises and their shares in the private sector entities were excluded from all exemptions granted under the Tax Act.
Until clarification is provided, it is not certain whether or not the government minority shares in the private sector manufacturing, mining and exports activities would enjoy the exemptions granted.
[31] Losses sustained by all taxpayers engaged in trading and other activities, who are required to keep proper books of account, provided they are accepted by the tax authorities; will be carried forward and written off against future profits for a period of three years.
[25] List of countries that have a double-taxation avoidance agreement with Iran (as of 2014):[7] It is noteworthy to point out that the Amendment has removed the second stage of appeal process.
[32] Following international sanctions, KPMG, PriceWaterhouseCoopers, RSM, Crowe Horwath and Grant Thornton have suspended their activities in Iran in recent years.
However, goods and services entering Iran's customs territory will be subject to payment of VAT according to the law.
Goods exported to Iran must be subject to invoices authenticated by the Iranian Embassy and by a nominated Chamber of Commerce operating in the supplier's country.
[46] As part of the resistive economy, the Supreme Leader of Iran has urged Iranians to consume more domestic products over imported ones.
However, goods and services entering Iran's customs territory will be subject to payment of VAT according to the law.
[53] Largest black markets in Iran are those of:[51][54][55] One Majlis member recently stated that IRGC black-market activities alone might account for $12 billion per year.
[58][59] These imports enter Iran through major ports such as Bandar-e Abbas or free trade zones such as the islands of Kish and Qeshm.
