Tax revenues accounted for 2,000 trillion rials ($6.31 billion), or 48.5% of the government’s 4,120 trillion-rial ($13.01 billion) income during the first five months of the current fiscal year (started March 21).
Tax revenues saw a 73% year-on-year rise during the period, thanks to measures taken by the government, including the connection of nine million point-of-sale terminals to the national taxation system and activating another nine million POS terminals. As a result, the number of taxpayers increased by three million by Aug. 22, Mehr News Agency reported, citing the Ministry of Economic Affairs and Finance.
The number of tax declarations submitted to the Iranian National Tax Administration increased from 3 million to 4.5 million (marking a more than a 50% rise) by Aug. 22.
The significant growth in tax revenues comes, as the government has yet to identify all taxpayers and the separation of personal accounts from business accounts is expected to become operational by Sept. 22.
On the other hand, the Comprehensive Taxpayers System, which is the main platform for the implementation of the law governing shopping terminals, will officially start as of Sept. 23. As per this law, all sales and purchases must be registered in the system in the form of electronic invoices.
The government aims to increase the share of taxes and reduce the share of oil revenues in the public budget, as the income from the sale of natural resources, including oil, gas and mines, is earmarked for the development of the country instead of being injected into the current budget.
In the first budget law of the government of President Ebrahim Raisi, the share of the National Development Fund of Iran from oil revenues increased from 20% to 40%. In addition, the 14.5% share of the National Iranian Oil Company, suggests that the government’s share of oil revenues has reduced to 45.5%.
Social Media Influencers to Be Taxed
According to Paragraph VI of the Budget Law of fiscal 2021-22, social media influencers with more than 500,000 followers who generate income from commercial activities will be subject to income tax.
Economy Minister Ehasan Khandouzi communicated the directive on taxing influencers to the Iranian National Tax Administration, according to which social media influencers were allowed to submit their tax returns by July 22, 2022; they will be denied any form of tax exemption if they fail to do so, ILNA reported.
“For INTA, it is not important whether the owner of the bank account is a dairy seller or a celebrity or an athlete. Artists will be exempt from tax if they earn less than 2,000 million rials [$6.31 billion]. All other celebrities who earn more must be taxed,” Davoud Manzour, the head of the administration, said.
On how influencers will be identified, Saeed Toutounchi, the deputy head of INTA, said, “The law states that influencers with more than 500,000 followers are subject to income tax. A list of influencers put together by agencies in charge of controlling and supervising social media has been placed at the disposal of INTA.”
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 to report tax evasions and receive a special reward.
A Future Sacrificed for Budget Deficit: Economist
Bank accounts with more than 100 transactions per month and a turnover of 350 million rials ($1,105) will be considered a commercial account and subject to tax, the Central Bank of Iran and the Money and Credit Council approved earlier this week.
“The decision raised concerns among the public. The fact is that if the government fails to solve problems regarding budget deficit through nuclear negotiations and oil revenues, it will have to look for other ways to offset the deficit. Since it does not have the expertise and technical ability to increase production and exports, it would constantly search people’s pockets and public accounts, and make decisions based on which people should be forced to pay more,” Morteza Afqeh, an economist and university professor, said in an article for the Persian-language daily Ta’adol. A translation of the text follows:
It should be noted that 350 million rials is not a significant sum under the current economic conditions; a peddler may register such a monthly turnover, but most of this amount may not belong to the individual and only a fraction of it might account for the profit he made that month. But the government is only looking for increasing public revenues. Interestingly, the government spokesperson and other officials keep telling people that they have not tied people’s livelihoods to the fate of the Joint Comprehensive Plan of Action [Iran nuclear deal]. However, they are taking measures that not only worsen people’s livelihoods, but also affect their economic prospects. People have to sacrifice their future for the government’s budget deficit. Therefore, the government has closely linked JCPOA with the economy, and continues to tighten this relationship by the day.
The economic team of the government pores into the laws of advanced western European countries in search of new tax bases, regardless of the fact that these countries collect taxes in exchange for providing services. Basically, tax should be determined vis-à-vis services extended by the government. What does this amount of tax collection mean when the country’s roads are in bad condition, Iranian planes are decades old and there are no decent leisure activities? These taxes have been introduced in an economy hit by sanctions and mismanagement.
The government only cares about taxing people while it fails to improve productivity at public offices — note that a large number of economic and industrial organizations are exempt from paying tax, which type of planning amounts to meting injustice to the people. An example of this new form of taxation is the violation of people’s rights but, unfortunately, the authorities do not pay attention to the fact that the poverty is the end result of these types of taxes.
Too much taxation hurts small businesses and increases unemployment. When faced with such government decisions, people have no choice but to migrate to other countries, or turn to non-transparent middlemenship. All these hit the economy hard, but sadly it seems that the government has turned a deaf ear to the warnings of economic players.
The government does not improve the business environment, or make its institution smaller, or increase the efficiency of public offices, or fight the rampant corruption of government companies.
People are the ones who have to pay the price of all these failures.
