The government earned 852.23 trillion rials ($3.09 billion) in tax revenues over the first half of the current fiscal year (March 20-Sept. 21), the Iranian National Tax Administration announced.
The government’s tax revenues consist of its returns from “direct taxation” and “tax on goods and services”. Direct taxes include the three groups of “tax on legal entities”, “income tax” and “wealth tax”.
Overall earnings from direct tax stood at 549.55 trillion rials ($1.99 billion), of which tax on legal entities earned 227.49 trillion rials ($827.23 million),
Revenues gained from income tax reached 192.65 trillion rials ($700.54 million) and wealth tax revenues topped 129.4 trillion rials ($470.54 million).
Tax on goods and services generated 302.68 trillion rials ($1.1 billion). H1 earnings from value added tax stood at 228.17 trillion rials ($829.7 million) while revenues from cigarette consumption tax and departure tax, which are other subcategories of tax on goods and services, hovered around 9.81 trillion rials ($35.67 million) and 326.73 billion rials ($1.18 million) in the six-month period.
The budgetary goal of tax revenues for the current fiscal year is set at 1,950 trillion rials ($7.09 billion). The government’s overall tax revenues stood at 1,090 trillion rials ($3.96 billion) in the year ending March 2019 and 1,410 trillion rials ($5.12 billion) in the year ending March 2020.
Tax Income to Public Budget Improves
Tax revenues to the government’s public budget resources increased from 35.1% in the year ending March 2019 to 37.5% in the year ending March 2020 and the tax revenues to current expenditure ratio also improved from 2.45% in the year ending March 2019 to 8.47% in the last fiscal year (ended March 20).
The data were announced by a report released by the Public Relations Office of the Ministry of Economic Affairs and Finance on policies, plans and achievements of the Iranian National Taxation Administration over the past year.
Budgetary goals on tax revenues were realized by 102% and tax income increased by 29% in the last fiscal year (March 2019-20) compared with the year before to reach 1,411 trillion rials ($5.23 billion), ILNA reported, citing the ministry’s report.
By July 21, the government earned 86% of the projected tax revenues compared with the same period of last year.
A total of 278,626 billion rials ($1 billion) in value added tax were paid to municipalities and rural administrator’s offices across the country from Aug. 23, 2019 to July 21, 2020.
Transition from the electronic to a smart taxation system was INTA’s main strategy in the last fiscal year to develop the country’s taxation system, finance the government’s public budget, reduce reliance on oil revenues, improve tax equity, fight tax evasion and increase administrative efficiency and taxpayers’ satisfaction.
Array of Reforms
The Iranian National Taxation Administration pursued the reform of rules and regulations, and sought to provide infrastructures needed to modernize 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 Economy Ministry at the High Council of Economic Coordination—an ad hoc economic decision-making body comprising heads of three branches of power—and approved therein.
INTA will grant tax waivers to companies wanting to go public. 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.
It made starting a business easier by removing 15 requirements and unnecessary regulations and consequently accelerated 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 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.
Putting together the bill on overhauling Direct Tax Code and sending it to the government for approval in the month ending Feb. 19, 2020, was another significant step taken by INTA in the last fiscal year. The bill includes new types of tax, namely the individual income tax or personal income tax (PIT)—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, etcetera. 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 for 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 communication between taxpayers and tax officers were other measures taken by INTA last year.
Outsourcing the implementation 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 to assist production units, treat clients with respect and promote decentralization were among significant measures undertaken by the tax administration over the past year.
INTA signed memorandums of understanding with over 100 executive agencies to complete a database on taxpayers’ information, their performance and properties by tapping into their database. In its fight against tax evasion and fraud, the administration scrutinized suspicious banking information of 14,542 taxpayers last year, which led to issuing tax statements worth 317,480 billion rials ($1.15 billion).
The implementation of value added tax was simplified for taxpayers at the last point of a distribution chain: 4,500 tax regulations, including bylaws and guidelines were surveyed. So far, 3,000 regulations have been streamlined, tax cases pertaining to March 2008-17 were resolved over the past year. INTA also lent its support to the economic operators of flood-stricken areas last year.
Following the outbreak of coronavirus, INTA took multiple actions to ease the burdens on taxpayers, support businesses with cash flow problems and facilitate tax reporting and payments. For instance, the due date for the submission of value added tax returns concerning the fourth quarter of last Iranian year (Dec. 22, 2019-March 19, 2020) was extended to May 20 and that of the first quarter of the current year (March 20-June 20) was extended to Sept. 5.
Deferral of tax payments for three months, allowing the payment of tax liabilities in installments over nine months of the first application for tax deferral and forgiving tax penalties were other measures introduced by INTA since the coronavirus spread nationwide.
