The profits tax on enterprises will be calculated based on sales registered in their point-of-sale systems, says the head of Auditing Department of the Iranian National Tax Administration.
Shahin Mostofi added that the money deposited in their banking account will not be factored in their tax calculation, Otaghiranonline.ir reported.
“The profits made by businesses are taxed by INTA; the higher the taxpayers’ profits, the more their taxes. According to Article 101 of the Law on Direct Taxes for Business Owners, up to 360 million rials [$1,124] in [annual] profit will be exempt from tax in the fiscal 2021-22. The sum of 360 million rials will be deducted from the profits made during the year and the rest will be taxed,” he said.
The official noted that up to 500 million rials ($1,561) of profit are subject to a 15% tax; a profit of between 500 million rials and 1,000 million rials ($3,123) is subject to a 20% tax and 25% tax will be applied to profits exceeding 1,000 million rials.
The due date for the submission of tax returns for the fiscal 2021-22 of business owners is July 6, 2022.
Earlier, INTA announced that 1.1 million small- and medium-sized enterprises have been exempt from taxes.
“Tax on 80% of SMEs will not be more than 50 million rials ($156) and that of 400,000 taxpayers will be between 50 and 200 million rials ($624). The tax of 100,000 businesses will be more than 200 million rials,” the head of INTA, Davood Manzour, was quoted as saying by IRNA.
INTA has required businesses whose sales exceeded 48 billion rials ($149,906) in 2021-22 to declare their earnings for taxation.
Capital goods trade profiting from the increase in prices and gaining income will be subject to taxation, he added.
“Once the capital gains tax becomes the law of the land, four commodities, namely housing, gold, foreign currency and automobiles, will be subject to tax. To implement this law, we need to have the infrastructure to calculate profits from the sale or transfer of goods,” Manzour was quoted as saying by Mehr News Agency.
Majlis Economic Commission has completed its research on capital gains tax. Hopefully, the bill will be reviewed in the open session of the parliament as soon as possible, he added.
As per the new approach employed by INTA, whistleblowing on tax evaders and other tax violations will be incentivized. The whistleblowing guidelines were communicated to tax offices on Feb. 27.
The public can log on to Intamedia.ir and report tax evasions and enjoy a special reward.
Ahmad Ghaffarzadeh, an advisor to Majlis Research Center (the research arm of the Iranian Parliament), says most optimistic estimates put the volume of tax evasion in Iran at 1,000 trillion rials ($3.12 billion) per year, implying that the volume may be much higher.
He said the tax-to-GDP ratio in Iran currently stands around 7%, ILNA reported.
This is while neighboring economies register up to 12-17% in tax-to-GDP ratio; the share increases to 30-35% in developing countries, suggesting that Iran’s economy needs to achieve a 50% surge in this ratio to reach the average rate of tax-to-GDP among neighboring countries.
Such an increase will materialize by setting new tax bases over the years. Therefore, the only way to achieve this goal under the current sanctions regime is by reducing tax exemptions of special institutions, whose former directors now hold posts in the new government and preventing tax evasion, according to the Persian-language daily Etemad.
Tax-to-GDP ratio has positive correlation with the country’s economic dynamism. Notably, tax revenues are the best way for tackling the budget deficit resulting from the fall in oil revenues.
The method and level of taxation are different in other countries; for years, Iran has been wrestling with challenges, including tax evasion of high-income groups like doctors and lawyers.
The low ratio of tax to GDP in Iran is alarming because it is one of the main indicators of economic development. It reflects the real production by an economy and shows the level of accountability of officials to the public.
Experts have time and again called for abolishing the tax exemption of special institutions.
