Tax Abusers on Notice

EghtesadOnline: To fight rampant tax evasion and fraud, the Iranian National Tax Administration will henceforth focus on the minority taxpayers who indeed are liable for the majority of unpaid taxes, head of INTA said.

News ID: ۷۵۰۲۴۷

15 June 2020

Speaking on state TV late on Saturday, Omid Ali Parsa said “Estimates suggest there are about 400-450 trillion rials ($2.2 billion-$2.5 billion) in unpaid taxes”.

The senior official said a small group of tax dodgers account for a large portion of unpaid taxes.

“INTA is concentrating on almost 4,000 people who are wealthy and have very high incomes but pay less tax,” Fars News Agency quoted him as saying.

Parsa said INTA is taking measures to collect unpaid taxes based on evidence and data about taxpayers’ revenue sources, warning administrative bodies that “the government may suspend their funding if they refuse to share information (on taxpayers) with the INTA”.

He stressed that relevant administrative bodies should provide INTA full details about taxpayers’ status.

INTA used to offer major concessions with regard to tax liabilities, he recalled, adding that those days are over and there will be not flexibility with tax dodgers and defaulters.

Parsa said INTA will soon publish the names of bodies that have failed to cooperate with the country’s highest tax authority.

He spoke about a plan to scrap a tax declaration method known as “estimated assessment procedure”, saying that “this is the demand of most taxpayers and we are trying  to put on end to this before the year is out.”

The estimated assessment procedure is used when the taxpayer fails or is late in filing his tax returns. The tax authority unilaterally assesses the estimated tax and informs the person or company to pay. The estimated assessment procedure puts the burden of proof on the taxpayer.

Mahmoud Alizadeh, INTA’s deputy for legal affairs, said Sunday about 20% of taxpayers account for 80% of the country’s total tax revenue.

“Therefore, it would not be tenable to focus on the 80% of those who pay less tax. It is better if we concentrate on the 20% who are liable for 80% of the taxes,” he was quoted as saying.

Amid the economic slowdown, coronavirus lockdowns and unprecedented decline in oil exports, the government is counting on taxes as a major source of revenue. As such, new tax categories have been introduced to curb the government’s unending budget deficits.

In recent years successive governments in Tehran have said in no uncertain terms that the perilous overreliance on unstable oil income has to end sooner than later. Senior officials have been quoted as saying that the economy should be the function of tax money.

However, how the incumbent government intends to raise taxes and compel businesses to pay their fair share under the present dire conditions is not known.

National tax revenue increased by 31% in the last fiscal year (March 2019-20) compared to the year before to reach 1,430 trillion rials ($8 billion).

The government has forecast 1,800 trillion rials [$10.2 billion] in tax revenues in the current fiscal year that ends next March.

Big-Timers

INTA said earlier that it wants to bring under closer scrutiny transactions above 50 billion rials ($283,000) conducted in the country.

As per INTA rules, the taxman is allowed to look into transactions conducted over the past five years.

“INTA can go back five years to look into transactions of those who concealed their income” to cheat the tax authority, Parsa has been quoted as saying.

Based on the new rules, the tax authority is authorized to inspect transactions worth 50 billion rials and above. This, however, does not mean INTA will overlook lesser transactions.

“In the case of tax evaders, INTA may also want to see transactions below five billion rials.”

Hadi Khani, an official with INTA, said earlier that tax collectors usually focus on three categories of bank transactions.

First are those who do not cooperate with the tax authority and refuse to play by the rules. The second includes those whose misdeeds and breaking of laws are verifiable in commercial records, such as bank accounts, commercial cards and fake and forged invoices.

Finally, INTA is keen on digging deeper into bank transactions of those who are known to be involved in or under suspicion of corruption.