Iran: Time to Go After Rogue Taxpayers

EghtesadOnline: At a time when the country is grappling with new US sanctions and extraordinary economic challenges, reports speak about billions in pending taxes, which if paid can go a long way in plugging the government’s budget deficits.

News ID: ۷۴۸۰۱۷

29 July 2019

Although there are no accurate figures on the unpaid taxes, the newly-appointed head of Iranian National Tax Administration, Omid Ali Parsa, estimates it to be in the region of 400 trillion rials ($3.3 billion), ISNA reported.

The amount is almost 35% of total tax revenue of the government estimated by the Economy Minister Farhad Dejpasand.

The numbers are troubling for the government struggling to find ways to cut deficit spending as national revenues shrink due to the mounting US restrictions on the key oil and banking sectors, according to Financial Tribune.

Beleaguered US president, Donald Trump, last year pulled out of the historic nuclear deal Iran signed with the six world powers in 2015 and imposed new economic sanctions,  particularly on oil exports – the lifeline of Iran’s economy.

Economists, market watchers and the general people say the present calendar year (March 2019-20) can be placed among the four toughest years that Iran’s economy has come across in the past decades due largely to the shrinking oil revenues and mounting animosity of the United States ruling clique.

Current year’s budget deficit is predicted at 1,500 trillion rials ($12.5 billion) and the government can plug a third of the deficit if it can collect the unpaid taxes.

Focus on Priorities

Maysam Mousae’e, an economist, points to the mountain of tax evasion cases as one of hurdles and a reflection of the inefficiency of the tax collection mechanism, saying there are 10 million tax evasion cases in INTA offices.

To cope with the mass tax evasion, he proposes INTA prioritize a million cases related to the big fishes and major tax evaders, arguing that dealing with small fry will produce “nothing but extra costs” for the national tax collector.

“Even if realized, unpaid taxes from small businesses would be meager at best.”

Earlier in the month, INTA said its officers had identified and collected unpaid taxes to the tune of 184 trillion rials ($1.5 billion) in the last fiscal year the ended in March.

Setting up shell companies, issuing forged invoices, fake export data, abusing tax exemption rules and sham deals are among the loopholes that tax evaders abuse and benefit from.

INTA has announced plans to curb tax evasion via methods such as promoting taxpayers’ database, tightening oversight of bank transactions and closely monitoring implementation of the value-added tax law.

The government earned 1,090 trillion rials ($7.26 billion) in tax revenues in the last fiscal year that ended on March 20, 2019.

Earnings had been estimated at 1,130 trillion rials ($8.52 billion) as per the fiscal 2018-19 budget.

In the budget for the current fiscal year 1,400 trillion rials ($10.9 billion) has been projected in tax revenue.