Banks to Share Account Data With Tax Authorities

As their deadline looms, banks and credit institutions are signing agreements that legally bind them to hand over information about the bank accounts of taxpayers to Iran National Tax Administration, an official with INTA announced.

"The banks [and credit institutions] have been notified that the tax returns for the previous fiscal year must be matched and compared with bank accounts and therefore they have until the end of the current [Iranian] month [August 22] to grant INTA access to their accounts," Ali Rostampour also told Fars News Agency.

"From a total of 40 banks and credit institutions, nine banks have signed the related agreement and the rest are on the verge of doing so," added the official, who heads INTA's Office of Tax Information.

Rostampour elaborated on the scheme by saying the executive directive of Article 169 was sent to top-tier executives of banks and credit institutions, and they were invited to provide the information.

The aforementioned article decrees that in line with promoting the transparency of economic endeavors and establishing an integrated tax information system, all natural and legal entities, i.e. individuals and businesses/organizations, must provide INTA with information.

The data is to be stored in the Integrated Platform for Exchange of Economic Information, which is a databank established and developed by the Ministry of Economic Affairs and Finance requiring a wide variety of government organizations to join in.

In February, Rostampour had announced the issuance of the directive, saying it will allow INTA to "access taxpayers' turnover and the annual balance of their bank accounts, deposits and interests".

As to how the scheme will progress, he said INTA will receive the information of the previous fiscal year from the banks and credit institutions, and check their veracity from the second half of the current year that starts in late September.

According to the official, bank executives, who have not yet signed the agreement, fear that turning over the information of clients would prompt them to take their deposits out of the banks, which would exacerbate the already serious dilemma of credit crunch facing the lenders.

While a number of them still deem this measure risky, "they have promised to hand over the data in one package and through the channel of the Central Bank of Iran".

Rostampour said negotiations are underway with CBI's Technical Department and when the scheme is implemented, all the concerns of lenders will be alleviated since each and every bank and credit institution will hand over the data at once.

As to the setbacks to the scheme devised over a number of years, the official admitted that lenders and the CBI itself resisted the scheme at first because no executive bylaw existed for it at the time.

However, when the regulations were devised with the collaboration of CBI and were subsequently signed by the Cabinet, "resistance broke and the legal department of the central bank confirmed that there is no confidentiality principle on giving bank account information to INTA".  

As Rostampour says, the tax administration currently has access to data concerning rial and currency loans but is waiting for information regarding sight and non-sight deposits that include the total turnover and latest balance of each account.

"There are 420 million bank accounts," he announced.

According to the official, bank executives are now on the same page and have expressed readiness to hand over the data, but a number of fringe issues persist.

As per the law, INTA must receive the information for any fiscal year within a maximum of 45 days after the year is through, but it has yet to receive all the data "because CBI believed that it is not in possession of all the accounts and so we held meetings with the banks".

Rostampour elaborated on the information that will be given to INTA.

The tax outfit will reportedly be in the loop about all the loans allocated and information concerning legal persons, but will be limited to accounts of over 500 million rials ($13,300) for natural persons.

With regard to deposits, all the information on the turnover and balance of sight and non-sight deposits of all accounts will be disclosed while for individuals, only information concerning accounts of over 5 billion rials ($133,300) will be handed over to INTA.