The government earned 1,314 trillion rials ($5.05 billion) in tax revenues in the eight months to Nov. 20, which account for 64% of the sum predicted in the budget for the period.
The government’s tax revenues consist of its returns from tax on legal entities, income tax, wealth tax, tax on imports and tax on goods and services, Fars News Agency reported.
Earnings from taxing companies and legal entities stood at 347.53 trillion rials ($1.33 billion), which account for 78% of the sum projected in the budget for the period under review.
The Iranian National Tax Administration earned 257.75 trillion rials ($991.34 million) from taxing civil servants and workers (income tax), which is 74% of the budget’s projected figure.
Wealth tax revenues stood at 157.68 trillion rials ($606.46 million) over the period, indicating a 186% realization rate. Wealth tax recorded the highest growth over the period, thanks to tax on stock trading.
Tax on imports earned the government 95 trillion rials ($365.38 million). The earnings from tax on imports constitute 39% of the projected budgetary requirements. The low realization rate is due to the decline in imports over the period.
And finally, tax on goods and services, which also includes value added tax earnings, hovered around 455.96 trillion rials ($1.75 billion), indicating 49% of the projected figure in the eight-month budget.
New Budget Bill Estimates $9.6b in Tax Revenues
Total tax earnings as per the fiscal 2021-22 budget bill have been set at 2,515 trillion rials ($9.67 billion), including 591 trillion rials ($2.27 billion) from tax on legal entities, 491 trillion rials ($1.88 billion) from income tax, 238 trillion rials ($915 million) from wealth tax, 235 trillion rials ($903 million) from tax on imports and 957 trillion rials ($3.68 billion) from tax on goods and services.
Vice President for Parliamentary Affairs Hosseinali Amiri recently submitted the budget bill for the next Iranian fiscal year (March 2021-22) to the parliament.
In the next fiscal year (to start March 21, 2021), the operating budget (including revenues derived mainly from taxation and exports at the disposal of the government) has been projected to stand at 8,413 trillion rials ($32.35 billion at the market exchange rate of 260,000 rials per US dollar).
Add to this, revenues earmarked for ministries and governmental institutions amounted to 884 trillion rials ($3.4 billion), which takes the total sum of the general budget to 9,298 trillion rials ($35.76 billion).
The budget of state companies, banks and for-profit organizations has been put at 15,619 trillion rials ($60 billion).
All in all, the ceiling set for the government’s total budget is at 24,357 trillion rials ($93.68 billion).
Tax Reforms
Iran’s National Taxation Administration pursued a variety of reforms in rules and regulations and carried out a major modernization of the taxation system.
Tax incentives were introduced for new companies willing to list on the stock market in the current fiscal year (March 2020-21). The proposal was floated by the Ministry of Economy at the High Council of Economic Coordination – an ad hoc economic decision-making body comprising heads of three branches of power – and approved therein.
The Iranian National Tax Administration will grant tax waivers to companies wanting to go public. Potential listed companies will be accountable only for tax liabilities in the previous fiscal year (March 2019-20) and INTA will not delve into prior tax records.
INTA made starting a business easier by removing 15 requirements and unnecessary regulations and consequently accelerating starting business procedure by 53 days. The Iranian Deeds and Properties Registration Organization was tasked with electronically putting at INTA’s disposal all the information it needs to issue tax file numbers, also known as Economic Code in Iran, for real entities.
Prior to this new measure, there were 45 stages to register for tax file numbers, of which 44 could be completed in less than half an hour but the last stage, the authentication process, would take days and consequently hurt ease of doing business. In addition, business entities don’t need to secure the value added tax registration permit.
The bill on Direct Tax Code Overhaul sent to the government for approval in the month ending Feb. 19, 2020, was another significant major taken by INTA in the last fiscal year. The bill includes new types of tax, namely the individual income tax or personal income tax, which is levied on wages, dividends, interest and other sources of income a person earns throughout the year, capital gains tax for residential property, vacancy tax; tax on luxury cars, etc. Amendments on tax exemptions and incentives have been envisioned in the proposal as well.
Taking measures regarding business owners' transactions processed through point-of-sale devices to improve transparency, drafting the roadmap toward modernizing the taxation system, including completing E-Tax and designing I-Tax systems, offering electronic services in matters including tax return filing, tax statements, registration of taxpayers and their electronic payments through smartphones and reducing in-person communications between taxpayers and tax officers were other actions taken by INTA last year.
Outsourcing the execution of property transfer tax to notary public offices, delegation of the authority to carry out tax forgiveness, determining payment of tax liabilities in installments and value added tax law to directors general of tax affairs across the country in order to shore up production, treat clients with respect and promote decentralization were among significant measures undertaken by the tax administration over the past year.
