Talks were between the tax chief and representatives from innovative companies and experts in digitizing the taxation system in a fresh move toward closer collaboration between the Iranian National Tax Administration (INTA) and the startup industry,
The meeting brought together key stakeholders, including the spokesperson for the Majlis Economic Commission, the president and secretary of the Fintech Association, CEO of the Blockchain Association, and the CEO of Dotin company.
Participants raised a host of critical issues with the main focus on lack of transparency in taxing cryptocurrencies and activities related to digital currencies, the Persian-language way2pay website reported.
Mohammad Mehdi Fatemian, chairman of the board of directors of the Fintech Association, criticized the way details of taxing cryptos was announced in the framework of the capital gains tax plan.
"Reports on taxing cryptocurrencies has instilled a sense of anxiety and risk in both users and customers of domestic cryptocurrency platforms creating the perception that if any transactions are conducted on domestic platforms they will be subject to tax. As a result, many have opted to migrate to foreign platforms."
Fatemian continued, "Therefore, given the impact of the unacceptable dissemination of information regarding crypto taxes plus the sheer lack of input by stakeholders [in building the tax structure], we see the flight from domestic crypto platforms to their foreign peers.
Rise to the Occasion
It is our strong belief and expectations that INTA rise to the occasion and create space for private enterprise when it comes to writing and implementing the relevant regulations."
Mustafa Amiri, secretary of the same association, noted, "We do not have an unambiguous legal definition of digital assets in the country. It appears that crypto assets will be subject to tax…it would be better for INTA to create a whitelist and send it to companies in this field. Needless to say, we are keen on preventing activities in the so-called black or gray markets."
Abbas Ashtiani, CEO of the Blockchain Association, emphasized that regulation in the digital economy space differs from other sectors and demands a more flexible approach when implementing laws. "Any mistakes in this area could potentially lead to the loss of information and compromise user security."
He added that one of the functions of blockchain technology is to build transparency in a company’s income and expenditure.
"The Blockchain Association is prepared to record transactions on blockchain to ensure transparent taxation. We acknowledge that implementing INTA’s mandate too is crucial, and the presence of digital economy stakeholders in meetings to write and enforce rules will contribute to this end."
Collaboration between the taxman and the digital economy community is key to ensuring fair taxation rules and preventing capital flight, market observers say. Integration of blockchain technology in the tax structure was reemphasized as a means to enhance transparency and streamline procedures.
As talks continue, market players expect INTA to seriously consider the concerns and suggestions by those involved in the crypto sector and pave the way for an open, comprehensive and transparent tax system to accommodate the unique features of the digital economy – placed on a higher pedestal by most countries.
The involvement of key stakeholders will play a pivotal role in shaping the future of taxation in the digital age, ultimately fostering a conducive environment for innovation and decent economic growth.
Draft Tax Proposal
Last year INTA prepared a draft proposal for taxing cryptocurrency exchanges and called on the regulatory bodies to create the groundwork to legalize crypto exchanges.
"Legalizing crypto exchanges is necessary [for tax needs]. Legal operations must be limited to authorized exchanges allowed to convert currency while keeping track of transactions," reads an excerpt from the INTA proposal.
INTA is of the opinion that stringent measures against crypto business have had adverse effects and by extension created conditions rife for the black market.
Transactions of the exchanges can be used by INTA as the basis for tax. "Regulations must include penalties and consequences for legal exchanges refusing to provide user records to INTA," the proposal said.
The tax authority has proposed three tax regimes for crypto exchanges, namely tax on capital gain, fixed base tax and occupational tax. However, it has not said anything about the mechanism for taxing such companies.
The proposal sets a cap on transactions with decentralized exchanges in accord with anti-money laundering regulations.
Mining virtual currency is legal in Iran and miners can operate under rules approved by the government in 2019. Per law, miners of cryptocurrencies are recognized as owners of the digital asset.
However, the law states that digital currency cannot be used for payment inside the country, but banks and licensed moneychangers can use digital money mined by authorized miners in Iran to pay for imports.
