Total tax earnings in the fiscal 2021-22 budget bill have been set at 2,515 trillion rials ($9.67 billion).
These include 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 submitted the budget bill for the next fiscal year (March 2021-22) to the parliament last week.
In the next fiscal year (starting March 21, 2021), the operating budget (including revenues derived mainly from taxation and exports at the disposal of the government) has been projected to reach 8,413 trillion rials ($32.35 billion at the market exchange rate of 260,000 rials per dollar).
Add to this, revenues earmarked for ministries and governmental institutions worth 884 trillion rials ($3.4 billion) take 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).
H1 Tax Revenues at $3.2b
The government earned 852.23 trillion rials ($3.27 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 returns from “direct taxation” and “tax on goods and services”. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.
Overall earnings from direct tax stood at 549.55 trillion rials ($2.11 billion), of which tax on legal entities earned 227.49 trillion rials ($874.96 million),
Revenues gained from income tax reached 192.65 trillion rials ($740.96 million) and wealth tax revenues topped 129.4 trillion rials ($497.69 million).
Tax on goods and services generated 302.68 trillion rials ($1.16 billion). H1 earnings from value added tax stood at 228.17 trillion rials ($877.57 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 ($37.73 million) and 326.73 billion rials ($1.25 million) in the six-month period.
The budgetary goal on tax revenues for the current year is set at 1,950 trillion rials ($7.5 billion). The government’s overall tax revenues stood at 1,090 trillion rials ($4.19 billion) in the year ending March 2019 and 1,410 trillion rials ($5.42 billion) in the year ending March 2020.
Tax Reforms
The Iranian National Taxation Administration pursued a variety of reforms in rules and regulations and sought to provide the framework needed to carry out a major modernization of the taxation system.
Tax incentives were offered to 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, which was approved forthwith.
INTA 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.
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 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.
Putting together the bill on Direct Tax Code Overhaul and sending it to the government for approval in the month ending Feb. 19, 2020, was another significant measure taken by INTA in the last fiscal year. The bill includes new types of tax, namely the individual income tax or personal income tax 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 toward modernizing the taxation system, including completing E-Tax and designing I-Tax systems, offering electronic services related to 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.
Significant measures were undertaken by the tax administration over the past year across the country to shore up the production sector, treat clients with respect and promote decentralization.
These included outsourcing the execution of property transfer tax to notary public offices, delegation of the authority to carry out tax forgiveness and determine the payment of tax liabilities in installments and value added tax law to directors general of tax affairs.
