The costs of bringing vehicles into Iran are not limited to the customs tariffs, the Islamic Republic of Iran Customs Administration’s list of cost breakdown showed.
During the closing days of 2017, the government of President Hassan Rouhani updated the auto import rules, increasing tariffs by 80-1,200%. Depending on vehicle type and engine capacity, a 15-95% import tariff has been levied on vehicles, but the total is not limited to the exorbitant tariffs.
As per the recent guidelines issued by IRICA, auto importers are required to pay a 9% value added tax and a 4% pre-tax.
In addition, a 5% “special tariff” is also extracted based on each vehicle’s FOB (free on board) costs.
FOB is a trade term requiring the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills its obligations to deliver when the goods have passed over the ship’s rail.
Firms are required to pay 1% tax to the local Red Crescent body—the money is supposedly used for buying ambulances. A 0.8% tax has been levied on car imports for standard checks.
The Traffic Police Department charges importers 10% of each car’s value for issuing number plates and 3% for ownership transfer procedures. Municipalities also receive a 3- to 7-million-rial tax ($63 to $147) per vehicle.
As per the guidelines, firms need to acquire five permits for bringing vehicles into Iran from the following authorities: Industries Ministry, Auto Importers Guild, Institute of Standards and Industrial Research of Iran, Iran Fuel Conservation Company and Department of Environment.
Import Scrappage Rules
As per the government ruling, auto importers are required to scrap 2-8 old cars for each imported unit. Scrapping each clunker costs at least 25 million rials ($650).
For each vehicle with fuel consumption of under 6 liters per 100 km, companies are to send two clunkers to the junkyard. If the vehicle’s fuel consumption stands between 6 and 7 liters, four old cars must be scrapped.
In case of vehicles burning 7-8 liters/100 km, six cars are to be scrapped and the number reaches eight clunkers for fuel-inefficient imported cars that burn over 8 liters/100 km.
The import scrappage rules apply to cars entering special economic zones that were exempted from such a ruling in the past.
Value of Vehicles
The value of different models is determined by a committee appointed by the customs administration annually. IRICA will also publish their value.
The customs administration will employ CIF (Cost, Insurance and Freight) method to calculate the customs duty. IRICA says transferring a vehicle from the Persian Gulf Arab states to Iran costs $500-750 per vehicle.
According to the latest statistics released by the customs administration, Arab states are the main source of car imports in Iran.
In the nine months ending Dec. 21, the UAE with $527 million (45.19%), South Korea with $124 million (10.63%), China with $56 million (4.86%) and Turkey $28 million (2.4%) were the main exporters of cars and heavy-duty vehicles to Iran. The UAE is also a major trading center and a reexport hub handling a large percentage of Iran’s foreign trade.
According to the latest government ruling, depending on engine capacity, import tariffs on gasoline-fueled vehicles have been increased by15-40%.
While most governments are offering incentives to promote and create interest in hybrids, the customs duty in Iran for hybrid gasoline-electric cars has been increased significantly from 4% to 45-65% depending on the vehicle’s gasoline engine capacity. The new rules ban the import of vehicles costing more than $40,000.
