Economy, Business And Markets

Iran: Taxman's H1 Income Hits $12b

Taxman's H1 Income Hits $12bTaxman's H1 Income Hits $12b

The Iranian National Tax Administration has collected 480 trillion rials ($12 billion) in tax and duties in the first half of the current Iranian year (March 21-Sept. 22), the INTA chairman said.

Noting that half the country’s budget is tied to taxes, Kamel Taqavinejad added that currently the tax-to-GDP ratio in Iran stands at around 8%, compared to 15-20% for neighboring countries.

The budget law of the current fiscal year (March 2017-18) has projected 1,150 trillion rials ($30.59 billion) in tax and customs revenues.

“Figures show tax evasion stands at between 140 and 300 trillion rials ($3.5-7.5 billion) in the country due to underground economy, smuggling and lack of transparency,” Taqavinejad was quoted as saying by IRNA.

According to the Ministry of Economic Affairs and Finance, in the fiscal 2015-16, informal economy accounted for 36.5% of GDP compared with 7% in 1974-75.

Taqavinejad has said fewer than 20% of taxpayers in Iran pay 80% of all tax while about 65% of all taxpayers are either exempt or pay less than 10 million rials ($266) in tax.

He announced that tax collectors of INTA managed to recover 50 trillion rials ($1.25 billion) from tax evaders last year.

“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,” he said.

The government’s tax revenues consist of its returns from direct and indirect taxation. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.

Iran’s taxes are among the lowest in emerging countries. Thanks to a relatively moderate 25% corporate income tax and no domestic withholding tax on dividends, Iran is one of the emerging markets where locally created value and cash repatriation to the investor’s home country attracts the lowest taxation.

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