Kamel Taqavinejad
Economy, Domestic Economy

INTA Against Replacing VAT With Consumption Tax

Chairman of Iranian National Tax Administration Seyyed Kamel Taqavinejad believes scuttling the value added tax and replacing it with consumption tax, as proposed by Majlis Joint Commission recently as part of the budget bill for the upcoming Iranian year (March 2017-18), would be a step backward for Iran’s taxation and fiscal systems.
“The move will reduce close to 400 trillion rials ($10.58 billion) in revenues,” he said.
VAT is a general consumption tax collected incrementally, based on the value added, at each stage of production or distribution, whereas the parliament’s newly-proposed consumption tax narrows the tax base to the final consumer.
Noting that VAT accounts for over 50% of INTA’s tax revenues, the official said consumer tax has replaced VAT in countries where the latter’s implementation has failed.
“This is while the experience of VAT in Iran has been successful,” IRNA quoted him as saying.
Proponents of the initiative believe the mechanism of consumption tax system is simpler and more effective compared to VAT. They also argue that it will help improve transparency and prevent corruption.
Two main violations are usually reported when it comes to the implementation of the VAT Law. First, some business owners charge their customers VAT but do not pay the same to the government.
Second, the government collects the VAT but avoids paying the revenues to related bodies. To prevent such violations, only the final consumer—the last point in a distribution chain—must be charged consumption tax, according to a report recently published by the Persian daily Shahrvand.  
The VAT Law took effect in the Iranian year to March 2009 and has since taken a lot of flak for its ambiguities. It currently stands at 9%.
Minister of Economic Affairs and Finance Ali Tayyebnia said as many as 500,000 taxpayers, including major producers and importers, pay around 150 trillion rials ($3.96 billion) in value added tax every year.
“Once the consumption tax becomes law, tax authorities will have to deal with over 3 million retailers across the country,” he added.

Short URL : https://goo.gl/2tvfPq
  1. https://goo.gl/Ru43xV
  • https://goo.gl/FU2FC4
  • https://goo.gl/kUffzx
  • https://goo.gl/Szk7kr
  • https://goo.gl/eM3i7V

You can also read ...

Iran’s Amendments to CFT Law, a Step in Right Direction – Part 2
In the article titled “Amendments to CFT Law, a Step in Right...
Iraqi PM Cancels Iran Visit
Iraqi Prime Minister Haider al-Abadi has cancelled a visit to...
Certified Exchangers List Gets Longer
The Central Bank of Iran has released the updated list of...
TSE Fastest-Growing Stock Exchange in World
Tehran Stock Exchange was the world’s fastest-growing stock...
Chinese EV Sharing Platforms Seeking New Funds
Two electric vehicle-sharing platforms backed by powerful...
Export of Six Commodities Banned as of Aug. 23
The government has banned the export of different kinds of...
Iran Khodro Makes Inroads Into Azerbaijan Car Market
Since March, and through a joint venture between Iran Khodro...
Auto Importers Warned Against Price Gouging
Iranian auto importers, who had brought vehicles into the...

Add new comment

Read our comment policy before posting your viewpoints