The Iranian National Tax Administration earned 1,370 trillion rials ($2.75 billion at the current market exchange rate) in tax income during the first quarter of the current fiscal year (started March 21) to register a 41% year-on-year rise, according to Mojtaba Amiri, the head of INTA’s Planning and Statistics Department.
Despite the significant growth, the income falls short of the budgetary target during the period, meeting 73% of it, he added.
This is while income from direct taxes exceeded 806 trillion rials ($1.62 billion) in Q1, registering a 42% rise.
Direct taxes include tax on legal entities, tax on income and wealth tax.
The official noted that INTA’s income from tax on goods and services saw a 39% rise to stand at 560 trillion rials ($1.12 billion).
“Direct taxes had the biggest share of total tax earnings with 59%,” he was quoted as saying by IRNA.
INTA earned 4,700 trillion rials ($9.44 billion) in tax income during the last fiscal year (March 2022-23).
“The earnings account for 103% of the figure estimated in budget and have increased by 54% compared to the preceding year,” Amiri had said earlier.
“From the total income, more than 2,930 trillion rials [$5.89 billion] pertain to direct taxes, accounting for 70% of the figure estimated in the annual budget and registering a 36% rise compared to the year before,” he said.
“Around 1,760 trillion rials [$3.53 billion] are related to tax on goods and services, accounting for 84% of the budget and marking a 51% rise compared to the year before.”
Sources of Rise in Tax Income
Davoud Manzour, the former head of INTA who now serves as the head of Plan and Budget Organization, has said identifying new taxpayers and adding resources by stemming tax evasion make up 60% of the rise in the government’s tax income.
On the remaining 40%, he said: “Part of the increase [in tax income] comes with rising commodity prices as value added tax is an important form of taxation. The 9% VAT evidently increases in volume in line with rising prices.”
The rise in tax income, he added, is also funded by manufacturing units’ exit from recession, which will increase value added generation.
Manzour noted that INTA came up with its own estimates about 350,000 companies as well as three million individuals who failed to submit their tax declarations last year.
Stating that the government pursues a policy of trusting taxpayers’ declarations, he added that only 5-10% of all declarations will be reviewed by the taxman.
According to Mehdi Movahedi, INTA’s spokesman, a significant part of the rise in tax income is due to high inflation, which is expected to stick above 40%.
Stressing that tax rates will remain the same as last year’s, he said efforts have been made to minimize pressure on the production and real economic sectors.
“Tax income has a 50% share in funding the government’s expenditure. We plan to maintain this share in the current Iranian year [March 2023-24],” he said.
Echoing Manzour’s comments, he explained that INTA is looking to raise its income by collecting tax arrears as well as stemming tax evasions.
The Ministry of Economic Affairs and Finance announced earlier in 2022 new measures taken by the government, including connecting nine million point-of-sale (POS) terminals to the national taxation system and activating another nine million POS terminals.
The Comprehensive Taxpayers System, which is the main platform for the implementation of the law of shopping terminals, requires all sales and purchases to be registered in the form of electronic invoices.
The government says it 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 supposed to be spent on the development of the country instead of being injected into the current budget.
New Tax Bases
INTA announced recently that all takeaway restaurants and coffee shops will be entitled to VAT as of June 22.
Also, Capital Gains Tax, which had been the topic of many discussions for a long time, was finally approved by the parliament lately. CGT is a component of income tax, levied on the income from the transfer of movable or immovable capital assets, tangible or intangible. The purpose of this type of tax is to regulate the activities of various economic sectors, limit speculative practices, increase government revenues, create social justice and reduce income gap.
Some radical supporters of this type of tax, even talk of its effect on bringing down inflation, stabilizing the foreign currency market, increasing investment in the real sector of the economy and economic growth and development.
What’s more, the Budget Law stipulates that 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 earlier communicated the directive on taxing influencers to the Iranian National Tax Administration.
And as per a 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 has been asked to log on to www.intamedia.ir and report tax schemes and evasions, and receive a reward.
INTA says it has identified 551 influencers who have been subject to an aggregate of 170 billion rials ($341,790) in tax.
According to Movahedi, 123 influencers were taxed a total of 23 trillion rials ($46.24 million) in the last Iranian year that ended on March 20, 2023, of whom 23 have admitted to paying tax, ILNA reported.
As per INTA’s budget law, INTA has been commissioned to identify and collect tax from influencers with more than 500,000 followers for their advertising revenues in user-centered social media.
