The Supreme Audit Court of Iran, the supervisory arm of the Iranian Parliament, has released its budget monitoring report for the first four months of the current fiscal year (March 21-July 22).
The periodic report provides information on financial flows and programs implemented by the government to achieve the goals and targets set in the 2022-23 Budget Law.
According to the new report, revenues and expenditures during the period achieved 62% and 66% of their respective budget targets.
The number of governmental agencies that failed to submit their financial statements during the period decreased by 51% year-on-year, from 218 to 107.
No privatization deal was signed during the four months to July 22.
The budget has targeted the sale of surplus government properties and assets worth 230 trillion rials ($768.2 million) during the period. However, as little as 580 billion rials ($19.37 million, which are less than 1% of the projected amount) were sold during the four months under review.
Crude Sales Jump by Over 480%
According to the findings of the new report, revenues from exports of crude oil and gas condensates increased by more than 480% to stand at 660 trillion rials ($2.2 billion) during the period.
Progress in talks to revive the Iran nuclear deal has thrown the spotlight on a sizable volume of crude held by Tehran, which could be swiftly dispatched to buyers in case an agreement is hammered out, Bloomberg reported.
About 93 million barrels of Iranian crude and condensate are currently stored on vessels in the Persian Gulf, off Singapore and near China, according to ship-tracking firm Kpler, while Vortexa Ltd. estimates the holdings at 60-70 million barrels. In addition, there are smaller volumes in onshore storage tanks.
“Iran has built up a sizable flotilla of cargoes that could hit the market fairly soon,” said John Driscoll, chief strategist at JTD Energy Services Pte.
Still, it may take “a bit of time” to iron out insurance and shipping issues, as well as spot and term sales post-sanctions, he added.
The likely full re-admittance of Iran to the global crude market, with the potential lifting of US sanctions, comes at a complex moment for oil traders. Investors are juggling the countdown toward far tighter European Union curbs on Russian crude flows from December, as part of the bloc’s pushback against the war in Ukraine. In addition, the mammoth sale of US President Joe Biden’s administration from the Strategic Petroleum Reserve will end in October.
The potential return of Iranian barrels into global oil markets – both from the volumes in floating storage and over the longer term – has weighed on futures prices in recent weeks, offsetting signs of tightness elsewhere.
The focus for diplomats is the revival of a multinational accord that limited Iran’s nuclear program in exchange for the lifting of related sanctions, including on oil flows. The original deal collapsed after then-president, Donald Trump, abandoned it. Last week, the US sent its response to the latest proposal, boosting speculation an agreement may soon be struck, although Tehran said on Sunday exchanges will now drag on into September.
Iran’s offshore crude hoard compares with the average daily global supply this year of about 100 million barrels a day, according to an estimate from the International Energy Agency. This is while the US has been releasing about 180 million barrels from SPR over a six-month period.
Since Trump stopped granting waivers to import Iranian oil after reimposing American sanctions, Iran’s daily shipments have held at about 1 million barrels, according to Emma Li, an analyst at Vortexa.
China has remained among the top buyers, as other nations backed away.
The current volume of crude and condensate in onshore storages within Iran is estimated at about 48 million barrels, Kpler data showed, adding that the producer could be holding even more oil in some land storages around China.
Longer term after any deal is struck and the offshore cache is drained, Iran would seek to rebuild production and step up overseas sales.
Goldman Sachs Group Inc., which is skeptical about a breakthrough in the near term, said even if a deal is reached, these wouldn’t begin until 2023, according to a note.
While Iran may aim to fill the void left by Russia in Europe, namely in Spain, Italy, Greece and even Turkey, Tehran would also attempt to reclaim a share in the prized Asian market, even if it takes a sweetening of terms, Driscoll said.
In 2017 and 2018, Europe consumed an average of 748,000 barrels and 528,000 barrels a day of Iranian oil, respectively, while Asia took 1.2 million and close to 1 million barrels a day, Kpler data showed.
“It’s natural for Iran to want to supply Europe first to fill in the hole left by post-invasion sanctions against Russia,” Driscoll said. “But in the longer run, they will be looking to place their barrels under long-term deals in Asia.”
69% Rise in Tax Revenues
The monitoring report also found out that tax revenues generated in the four months grew by 69% compared with the same period of last year to stand at 1,540 trillion rials ($5.14 billion).
A total of 4.44 million tax declarations have been submitted by real entities in the current Iranian year (March 2022-23), indicating more than a 50% increase compared with last year, Mohammad-Taqi Pakdaman, an INTA official, said last month.
“As many as 2.2 million new taxpayers were identified in the fiscal 2021-22, thanks to the streamlining of bank payment gateways,” he was quoted as saying by IRIB News.
“The taxation system is shifting its focus on high-income enterprises,” Davoud Manzour, the head of Iranian National Tax Administration, said recently.
Noting that tax on manufacturing enterprises has reduced by 5-20% this year, he said tax forgiveness is on INTA’s agenda for certain businesses.
Manzour said the overall tax income is projected to see a 2.5-fold increase this year.
“However, from 4 million taxpayers [who have submitted their tax declaration], 1.6 million have been entitled to zero taxation and 800,000 others are to pay less than 5 million tomans [$167] in tax. High-income taxpayers, including medical doctors and lawyers, will account for 50% of our tax income,” he added.
As per the fiscal 2022-23 budget of the government, annual income tax exemption ceiling has been set at 672 million rials ($2,244).
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 and that of 400,000 taxpayers will be between 50 to 200 million rials [$668]. The tax of 100,000 businesses will be more than 200 million rials,” the head of INTA was quoted as saying by IRNA.
INTA has required businesses whose sales exceeded 48 billion rials [$160,320] in 2021-22 to declare their earnings for taxation.
The profits tax on enterprises will be calculated based on their sales deposited into their point-of-sale systems, says the head of Auditing Department of the Iranian National Tax Administration.
“The profits businesses make is 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 [$1,202] in [annual] profit will be exempt from tax in the fiscal 2021-22,” Shahin Mostofi was also quoted as saying by Otaghiranonline.ir, noting that a sum of 360 million rials will be deducted from the profits made during the year and the rest will be taxed.
“Up to 500 million rials [$1,670] of profit are subjected to a 15% tax; a profit of between 500 million rials and 1,000 million rials [$3,340] is liable to a 20% tax and 25% tax will be applied to profits exceeding 1,000 million rials,” he said.
