Tax Incentive for POS Devises

"We have extended the deadline for registering POS payment gateways by one month. Those who fail to comply will not be eligible for government incentives and will be fined and their gateways will be suspended," Mohammad Barzegari, an official with the INTA, said, ebinews.com reported. 

Law-abiding businesses will be eligible for a one-time tax exemption up to 360 million rials, Barzegari said. 

INTA in coordination with the Central Bank of Iran initiated a plan last year to connect payment gateways to the national tax system to curb tax evasion, particularly in the high-income brackets.

As of January 2022 applicants for POS or other payment gateways have to first file tax returns and those already owning the payment instruments are automatically eligible for tax. 

The rules have “significantly curbed” illegal activities using rented payment gateways and play a key role in monitoring fraud, money laundering and online betting because owners of the gateways are held accountable and must pay tax. 

With persistent reports of tax evasion and undeserved tax exemptions, the government is struggling to curb rampant tax dodging that costs the country billions of dollars every year. 

Some guilds have been under criticism for demanding cash from customers and evading banking channels to avoid paying tax. This has rendered tracking their income difficult if not impossible. Officials say by looking into transactions via POS the veracity of tax returns should be enhanced.

So far fifteen guilds, including 50 occupations, are required to use POS machines and issue receipt for the goods and services. 

There were more than 9.8 million active POS terminals in Iran up until last December. 

In terms of the share of e-payment market last year, POS devices topped the list with a 75.9%. Online gateways were next at 12.54% followed by mobile payment gateways at 11.52%.

Higher number of POS devices is largely due to their wider spread compared to other devices plus the convenience with which payments are made without the need for supplementary devices such as PC or cellphone, which may not always be accessible.

POS devices accounted for 90.7% of the total e-payments processing 2.96 billion transactions worth 5,862 trillion rials ($19.8 billion) during the month ending Dec. 21.