Tax Loopholes in Iran Professional Football

The Asian Football Confederation has some worrying news for Iranian football clubs.

AFC’s inspectors are expected to visit the country to carry out special investigation into the documents of two major national teams, Persepolis and Esteghlal, with focus on their mounting debts, the Persian daily Donya-e-Eqtesad reported.

The confederation has stressed that football clubs should not have unsettled debts, or else they will be denied permission to participate in Champions League. This comes as, up until now, Iranian clubs have managed to evade suspensions by convincing AFC of being profitable economic entities.

But the new wave of AFC inspections would make it more difficult for the country’s football representatives to attend international tournaments. The interesting point is that tax debts of Iranian football clubs have also caught its attention.

Transparency is missing in Iran’s major national teams when it comes to tax debts. The only thing we know is that over the years, the bank accounts of Persepolis (known as The Reds) and Esteghlal (The Blues) have been blocked several times. It was about a year ago that the bank accounts of the two Tehran-based clubs were blocked simultaneously, as their debts to Iranian National Tax Administration were estimated at between 100 and 150 billion rials ($2.6-4 million). It is highly unlikely for the duo to have repaid their tax debts until now, which will spell trouble for them vis-a-vis AFC.

Unpaid debts not only hit the economy, but they can also create agitations among players and managers of teams, apart from affecting their games.

Recently, Alireza Mansourian, the manager of Esteghlal, learned about his travel ban just before a football game in the UAE. Ali Daei, a former footballer, businessman and current Saipa FC manager, has also clashed with Persepolis officials time and again for not paying his taxes.

A great part of the problems associated with tax debts is rooted in a wrong precedent, such that Iran’s football clubs, which are desperate to sign players and eminent managers to please their fans, agree to pay their taxes. In doing so, the employee hands over the responsibility of paying taxes to the employer, questioning the whole logic of taxation.

Players and managers also usually claim about not receiving their whole remuneration agreed upon by the clubs, but have to pay the tax on the figure recorded in their contracts. Tax on players’ income should be charged on their real income rather than the figure mentioned in the contracts, they say.

In June, the INTA office of Tehran Province tasked Iran Football League Organization to post all contracts on its website for more transparency on the tax paid by football players, director of the administration, Mohammad Reza Nouri, told ILNA.

Footballers are required to settle their tax liabilities before they can be granted a permit to participate in tournaments, he added.

Nouri said the Iranian National Tax Administration would take legal action against tax dodgers, including professional athletes, by imposing restrictions on the transfer of footballers.