The Iranian National Tax Administration is moving with the times and adopting new technologies in its plan to overhaul Iran’s taxation system.
The organization is building new databases and using data-matching software to find tax evaders. Electronics will make falsifying records, hiding assets and other swindling methods harder to pull off.
“The focus is on expanding the tax base and targeting entities currently exempt rather than raising taxes for those already paying,” Vice President Mohammad Baqer Nobakht said on January 18.
The government’s newly-drafted direct taxation code overhauls tax exemptions, adds new taxpayers and is geared toward boosting manufacturing, according to Economy Minister Ali Tayyebnia.
The new code will go into effect at the start of the upcoming Iranian fiscal year on March 20. These steps are all part of what is called “Comprehensive Taxation Plan” by the INTA.
“With the implementation of the Comprehensive Taxation Plan, most of the policies and strategies of the taxation system will materialize. The INTA will undergo deep and broad changes and will overhaul its procedures,” INTA’s head, Seyyed Kamel Taqavi, was quoted by IRNA as saying.
“The organization will need to train its workforce to use the new technologies it is adopting.”
Short on Revenue
The government is trying to squeeze out every penny it can from all its income sources. This is while crude oil–Iran’s main export–has dropped to the lowest since 2003 and the prospect of further declines is forcing the government to increase tax revenues by plugging loopholes and countering corruption. The Comprehensive Taxation Plan aims to make tax revenues more reliable.
Taxes are projected to raise 1,010 trillion rials ($27.7 billion) in the budget for the upcoming 2016-17 fiscal year, up 17.3% from the prior budget’s 861 trillion rials ($23.6 billion).
The increase will come from more efficient taxation by countering tax fraud, streamlining the tax code and getting more people and companies to pay their dues.
Changes to the Code
One of the main changes to the tax code is income tax cuts to make businesses more competitive.
The top end of personal income tax will be cut to 25% from the current 35% while the bottom end will remain at 15%, according to Taqavi.
The new law also reduces income bands in the tax code to three bands instead of the previous five. However, the bands have been widened.
With the new law, people pay 15% tax up to 600 million rials ($16,300 at market exchange rate) of annual income, up 240 million ($6,500) from the current tax code.
INTA is offering a one percentage point tax break for every 10% increase in income from the previous year. The tax break is capped at five percentage points.
