Economy, Domestic Economy

Tax Dodgers Will Be Penalized

Tax Dodgers Will Be Penalized Tax Dodgers Will Be Penalized

Based on new amendments to the tax law, tax evaders will henceforth face criminal charges, fines and prison terms, head of the Iran National Tax Administration Ali Asgari said Monday.

"Tax evaders will also face social exclusion, which means they will be barred from serving on the board of any organization or as members of any association or the Parliament," IRNA quoted him as saying

As part of the Comprehensive Taxation Plan, the INTA will collect information on commercial contracts from customs authorities, the stock exchange, insurance companies and banks in a bid to curb tax evasion.

"Tax evasion in the country is equivalent to 20-25% of gross domestic product, amounting to 300 trillion rials ($9 billion) per year. This is over and above the 40% of GDP which is exempt from taxation," Asgari noted.

Last year, the government was able to collect 97% of its projected tax revenues amounting to 576 trillion rials ($17.5 billion). Tax revenues are expected to grow by 30% compared to the previous year and reach 752 trillion rials ($22.8 billion) in the current fiscal year (ending March 19, 2016).

After taking office in the summer of 2013, the Rouhani administration was quick to make known that taxes would form a key part of its sources of revenue. The subject got added attention since mid-2014 when international oil prices plunged from a peak of $110 /barrel in July of that year to below $65 this week.

It is often reported that the traditional bazaar across Iran is averse to paying taxes despite unusually high levels of profit and incomes from a variety of sources. There are also some powerful state-affiliated organizations that do not have the habit of paying taxes.

Pundits and policymakers have routinely called on successive governments to come up with an efficient tax regime that rewards tax payers and penalizes tax dodgers. With oil revenues now cut by more than half due to the freefall in crude prices, it seems the government is gradually coming to terms with the ground realities that the oil-based economy is simply not sustainable and that it must move in the direction wherein tax revenues form a substantial part of the national budget.