Iran: Tax Revenues Rise 4% to $7b

EghtesadOnline: Director of Iranian National Tax Administration Omid Ali Parsa says the government’s tax revenues reached 890 trillion rials ($7.09 billion) during the first eight months of the current Iranian year (started March 21).

News ID: ۷۴۹۰۹۵

03 December 2019

This marks a 4% rise over the same period of last year’s tax earnings, according to data provided by the Central Bank of Iran.

Tax revenues stood at 855 trillion rials ($6.81 billion) in the eight-month period ending Nov. 21, 2018.

According to a Fars News Agency report, tax revenues during the seven months leading to Oct. 22 stood at 780 trillion rials ($6.21 billion), Financial Tribune reported.

The seven-month tax earnings indicate that 55% of tax revenues projected in the Budget Law of the fiscal 2019-20 i.e. 1,400 trillion rials ($11.15 billion) have been realized by the end of the seventh month.

According to Elyas Hazrati, the head of Majlis Economic Commission, 85% of Iran's tax revenues come from only 3% of taxpayers.

He mentioned a gap between Iran's 1,270 trillion rial ($10.11 billion) tax revenue and 3,200 ($25.49 billion) in current expenditures (per annum).

Mohammad Baqer Nobakht, the head of Plan and Budget Organization, said tax will be a major source of funding in next year's budget.

"We don't intend to increase taxes already paid by taxpayers," he said, noting that manufacturing enterprises will even see their tax bases reduced next year.

"We have introduced new taxes, such as capital income tax," he added.

According to the PBO chief, by annulling part of the staggering volume of tax exemptions, the government will also be able to make up for the breakaway from oil revenues.

According to the INTA chief, 40% of Iran’s economic players are exempt from paying taxes.

Besides tax exemption, the government budget in Iran also suffers from widespread tax evasion.

Gholamali Jafarzadeh Imenabadi, a member of Majlis Plan and Budget Commission, puts the size of tax evasion at 400,000 billion rials ($3.18 billion) annually.

“Up to 800,000 billion rials [$6.37 billion] will return to the government coffers [annually] if the current legislation on tax exemption is reviewed. I believe the value of tax exemption and tax evasion together is more than 1,000 trillion rials [$7.96 billion],” he said.

Value added tax accounts for the lion’s share of total tax revenues in Iran with 23.5%, as per INTA figures, followed by corporate tax and import tax. This is while income tax makes up the biggest share of tax revenues in high-income countries. Corporate (company) tax is the second top earner of such revenues in Iran.

Tax will also be levied on products that cause environmental damage in their manufacture or use, an official with the Iranian National Tax Administration said earlier.

Mohammad Masihi added that a 2% tax will be imposed on domestically manufactured paint, coating, primer, tires, tubes, plastic and electronic toys, plastic containers, polyethylene terephthalate and melamine.

Imports of the above-mentioned products will be subject to a 3% tax.

“Locally-produced light bulbs, except for SMD/LED, will be subject to a 3% tax, while a 4% tax will be levied on their imported counterparts," he said.

“A 3% tax will be levied on domestically manufactured computers, audiovisual equipment and cellphones, as well as linoleum, cellophane and nylon. Importers of these products will be required to pay a 4% tax."

Environmental tax, also known as green tax, pollution tax or eco-tax, refers to a wide range of legislative charges on private businesses and individuals, aimed at reducing practices that harm the environment.

There are many forms of environmental tax, some of which are aimed at penalizing those who emit harmful chemicals in the air and some of which reward those who employ environmentally-friendly practices.

Green taxes give legislators and policymakers a powerful tool for environmental protection, which supplements regulatory strategies.

While regulatory mechanisms are used by the government to lessen environmental damage by restricting or banning certain products and activities, green taxes seek to achieve the same goals by awarding economic incentives.

The popularity of this approach to environmental problems has led many European nations to enact green taxes in recent reforms.