Domestic Economy

INTA Claws Back $1.33b From Tax Evaders

Currently, fewer than 20% of taxpayers in Iran pay 80% of all tax
Kamel TaqavinejadKamel Taqavinejad
About 65% of all taxpayers are either exempt or pay less than 10 million rials ($266) in tax

The fight against tax evasion led to the reimbursement of over 50 trillion rials ($1.33 billion) in tax revenues in the last fiscal year (March 2016-17), the chairman of Iranian National Tax Administration said.

“Over 300,000 new taxpayers and 3,000 front companies were identified across the country over the past year and about 33 trillion rials ($880 million) of their suspicious banking transactions were identified,” Kamel Taqavinejad also told the Persian newspaper Iran.

Noting that the government’s program to counter tax evasion is an INTA priority, Taqavinejad said the establishment of anti-money laundering office in the Ministry of Economic Affairs and Finance has helped step up the investigation of tax evasion cases.

Iranian individuals and business owners that push for tax fairness are looking to remove loopholes, discriminatory incentives and cheating within the tax system. Tax fairness supporters believe these practices place an undue tax burden on certain segments of the taxpaying population, while making it easy for other segments to significantly lower their tax burdens.

Taqavinejad noted that currently, fewer than 20% of taxpayers in Iran pay 80% of all tax.

These taxpayers are real and legal entities active in economic sectors, such as automakers, banks, insurance companies, oil and natural gas, petrochemical, telecommunications and stock exchange companies as well as steel, cement and food manufacturing plants.

Moreover, about 65% of all taxpayers are either exempt or pay less than 10 million rials ($266) in tax.

One of the measures taken by Iran’s tax administration for promoting tax fairness has been to incrementally increase baseline tax exemption on a yearly basis.

In the fiscal 2013-14, those who made 8.33 million rials per month (about $222) were exempt from paying income tax.

“As per the new law, employees earning 20 million rials ($about 534) are exempted from paying income tax in the current Iranian year,” Taqavinejad said.

INTA’s exceptional performance last year in generating 96% of revenues targeted in the budget drew the admiration of President Hassan Rouhani as well as economic elites last year.

More than 1,700 trillion rials ($45.33 billion) in value added tax have been collected by March 20, 2017, since the implementation of the VAT law, of which 600 trillion rials ($16 billion) have been paid to municipalities.

Only in the last fiscal year, INTA deposited close to 40 trillion rials ($1.06 billion) with Tehran Municipality. Tax and duties paid to the municipalities across the countries in the 11th government (the first four-year tenure of President Hassan Rouhani) were three times more than the previous two governments: 43 trillion rials ($1.14 billion) as compared to 17 trillion rials ($453.33 million).  

Duty and taxes paid by INTA to Tehran Municipality since VAT came into effect stand at 150 trillion rials ($4 billion): About 35 trillion rials ($933.3 million) of which pertain to the previous two governments whereas the government of President Rouhani paid 115 trillion rials ($3.06 billion) to the municipality.

“INTA has paid about 88 trillion rials ($2.34 million) to the Iranian health system over the past three years,” Taqavinejad concluded.

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