Q1 Tax Revenues Up 70% to $2.3b

The average goods and services Consumer Price Index in the year ending March 20, which marks the end of the fiscal 2020-21, increased by 36.4% year-on-year, the Statistical Center of Iran reported. 

According to Mohammad Masihi, a deputy head of INTA, the first quarter’s revenues from direct taxes and value added tax accounted for 330 trillion rials ($1.33 billion) and 260 trillion rials ($1.04 billion) of total earnings, respectively. 

The budget law for the current fiscal year (March 2021-22) has projected more than 2,470 trillion rials ($9.95 billion) in tax revenues for the government, ISNA reported. 

A total of 1,925 trillion rials ($7.76 billion) in tax were collected in the last fiscal year (March 2020-21), indicating a 37% increase compared with the year before. 

Masihi noted that the government earned 107% of the budgetary income projected from taxation in the last fiscal year. 

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

Direct tax earnings stood at 1,190 trillion rials ($4.79 billion) in the year ending March 20, to account for 136% of the income projected in the budget law and 46% more than direct tax revenues of the preceding year (March 2019-20). 

“Tax on goods and services generated 735 trillion rials ($2.96 billion) for the government, accounting for 80% of the expected budgetary figure and 23% more than the corresponding revenues in the previous fiscal year,” he was quoted as saying by Fars News Agency. 

Referring to the sub-sections of direct tax revenues, the official said taxation of legal entities generated 560 trillion rials ($2.25 billion) during the period under review, indicating a 27% growth year-on-year. 

A total of 395 trillion rials ($1.59 billion) in income tax were collected as well, registering a 36% YOY rise. 

In the last fiscal year, wealth tax earned 232 trillion rials ($935 million), showing a 178% increase compared with the year before.

The official blamed the coronavirus pandemic and decline in transportation and fuel consumption for a 14% decrease in petroleum products’ tax revenues and said INTA collected 60 trillion rials ($241 million) from taxation of petroleum products last year. 

“Self-declaration of tax returns accounted for 70% of the country’s tax revenues, which allowed INTA to focus on improving tax collection from major taxable persons. INTA also managed to collect 100 trillion rials [$403 million] from overdue tax returns,” Omid Ali Parsa, the head of the Iranian National Tax Administration, was quoted as saying by Mehr News Agency recently. 

Noting that tax evasion accounts for an estimated 400-450 trillion rials ($1.6-1.8 billion), the official said, “Up to 40,000 bank accounts with transactions of more than 50 billion rials [$200,000] per year will be investigated technically and professionally in order to prevent tax evasion.”

Fiscal 2021-22 Income Tax Rates, Exemptions

Government employees and private sector workers who earn 480 million rials ($1,935) annually or 40 million rials ($161) monthly or less will exempted from income tax in the current fiscal year (March 2021-22). 

According to a directive communicated to the country’s tax offices by Mahmoud Alizadeh, a senior official with INTA, the following progressive tax rates will be applied to total taxable income of public and private sector employees (except for academics and judges):

* An income tax rate of 10% on remuneration in excess of 480 million rials to 960 million rials ($3,870) annually;

* An income tax rate of 15% on remuneration in excess of 960 million rials to 1.44 billion rials ($5,806) annually;

* An income tax rate of 20% on remuneration in excess of 1.44 billion rials to 2.16 billion rials ($8,709) annually;

* An income tax rate of 25% on remuneration in excess of 2.16 billion rials to 2.88 billion rials ($11,612) annually;

* An income tax rate of 30% on remuneration in excess of 2.88 billion rials to 3.84 billion rials ($15,483) annually

* An income tax rate of 35% on remuneration in excess of 3.84 billion rials. 

Income tax of academics (university teachers) has been set at the fixed rate of 10% on remuneration in excess of the tax exemption limit. Notably, tax on their merit pay will be calculated based on the above rates. Income tax of judges has been set at the fixed rate of 10% on remuneration in excess of 480 million rials to 3.36 billion rials ($13,548). Judicial salaries in excess of 3.36 billion rials will be taxed at the fixed rate of 20%, ILNA reported.