Tax on POS Transactions Mandatory

Newcomers wanting to apply for POS or other payment gateways have to first file tax returns and those already own the payment instrument will be automatically eligible for tax, Mehran Maharamian said. 

He said the regulator will block the POS machines of those who fail to provide the Iranian National Tax Administration ID information needed to file tax returns, the CBI public relations office said.  

The plan to tax POS transactions became law two years ago but has gone through adjustments ostensibly due to technical issues. The law was passed to curb tax evasion by businesses particularly in the high income brackets like lawyers, physicians and realtors many of them infamous for evading tax.

Maharamian said the new rules should “significantly curb” illegal activities using rented payment gateways. "This will play a key role in reducing illegal activity such as money laundering and online betting because owners of the gateways will be held accountable and pay tax.”

He assured the public that in implementing the new tax rules priority is given to POS machines and online payment gateways with high turnover. "INTA has reassured us that implementing the law will not hurt the SMEs.”  

On the fate of those who own a POS device but do not use it for commercial and business purposes, the CBI official said they have to communicate with INTA. 

Guilds have long been under criticism for demanding cash from customers and ignoring banking channels to cheat the taxman. This has rendered tracking their income difficult if not impossible. Officials say by looking into transactions via POS  the veracity of tax returns would be enhanced.

With persistent reports of rising tax evasion and tax exemptions, the government is struggling to curb the trend that costs the country billions of dollars every year. Controlling the operation of POS devices in and outside Iran and tightening supervision over dubious bank transactions was put on the agenda by a group comprising administrative bodies, namely the CBI, the Ministry of Information and Communications Technology, law enforcement agencies and INTA. 

Cooperation between INTA and CBI is crucial simply because control over POS devices is beyond INTA’s purview and the responsibility of Shaparak, the nationwide electronic payment settlement network affiliated to the CBI. 

The new plan is in line with the so-called ‘smart taxation’ system announced by INTA. It says transition from electronic to smart taxation is a process to develop the tax system, help government funding, reduce overreliance on oil revenue, promote fair tax collection and fight fraud.