Gov’t Earned $8.7b in Tax Income During 10 Months, Up 55% YOY: INTA

EghtesdaOnline: he government is expecting to earn 8,380 trillion rials ($18.78 billion) in taxes as part of the upcoming Iranian year’s budget bill (March 2023-24). The figure shows a 59% rise compared to the current year’s budget.

News ID: ۷۵۲۲۳۶

07 February 2023

The government earned 3,887 trillion rials ($8.71 billion) from taxation during the period from the beginning of the current Iranian year on March 21, 2022 to the end of the 10th month of the year on January 20, the head of the Iranian National Tax Administration’s Planning and Statistics Group, Mojtaba Amiri told IRNA, adding that the figure shows a 55% rise compared to that in the similar period of last year.

Income from tax on goods and services stood at 1,471 trillion rials ($3.29 billion) during the period to register a 46% year-on-year rise.

Direct taxes stood at over 2,417 trillion rials ($5.41 billion), up 60%.

Tax on legal entities stood at over 1,594 trillion rials ($3.57 billion), indicating a 78% rise.

Income tax grew 36% to 676 trillion rials ($1.51 billion) and capital tax rose 30% to 146 trillion ($327.35 million).

Davoud Manzour, the head of INTA recently said identification of new tax payers and stemming tax evasion account for 60% of rise in the government’s tax income.

On the remaining 40% he said: “part of the increase [in tax income] comes with rising commodity prices as vale added tax is an important form of taxation. The 9% VAT evidently increases in volume in line wit rising prices.”

Another aspect to rise in tax income, he added, is funded by manufacturing units’ exit from recession, which will increase value added generation.

Manzour went on to say that INTA came up with its own estimates about 350,000 companies as well as three million individuals who failed to submit their tax declarations this year.

Saying that the government pursues a policy of trusting taxpayers’ declarations, he added that only 5-10 percent of all declarations will be reviewed by the taxman.

Fiscal 2023-24 Budget Expects 59% Rise in Tax Income

The government is expecting to earn 8,380 trillion rials ($18.78 billion) in taxes as part of the upcoming Iranian year’s budget bill (March 2023-24). The figure shows a 59% rise compared to the current year’s budget.

President Ebrahim Raisi submitted the budget bill to the parliament on January 11.

The submission was about one month late as it is due in the 15th day of the ninth Iranian calendar month every year, which fell on December 6th, 2022 this year.

As ISNA reported, tax on legal entities has increased 122% (the highest among different forms of taxes) to 2,960 trillion rials ($6.63 billion).

Income tax has increased 45% to 1,220 trillion rials ($2.73 billion).

Capital tax has increased 37% to 370 trillion rials ($829.59 million).

Tax on imports has increased 67% to 1,290 trillion rials ($2.89 billion).

And tax on goods and services has increased 24% to 2,520 trillion rials ($5.65 billion).

The Iranian parliament, Majlis, passed the outlines of the budget bill on January 22.

No New Tax Bases/Rise in Rates

Allaying concerns about further increase in taxes on businesses and salespeople, Mehdi Movahedi, the head of Fiscal Planning Center of INTA said recently: “there will be no new tax bases or rise in tax rates.”

“A significant part of the rise [in tax income] owes to high inflation which is expected to stick above 40%,” he was quoted by IRIB News as saying.

Stressing that tax rates will remain the same as past year’s, he said efforts have been made to minimize pressure on the production and real economic sectors.

“Tax incomes have a 50% share in funding the government’s expenditure. We plan to maintain this share in the year ahead.”

Echoing Manzour’s comments, he explained that INTA is looking to raise its income by collecting tax arrears as well as stemming tax evasions.

The Ministry of Economic Affairs and Finance announced earlier in 2022 new measures taken by the government including connecting nine million point-of-sale (POS) terminals to the national taxation system and activating another nine million POS terminals.

“As such, the number of tax payers increased by three million by August 22…The number of tax declarations submitted to the Iranian National Tax Administration increased from three million to 4.5 million (more than 50% rise) by July 22.”

Moreover, the Comprehensive Taxpayers System, which is the main platform for the implementation of the law of shopping terminals, requires all sales and purchases to be registered in the form of electronic invoices.

The government says it aims to increase the share of taxes and reduce the share of oil revenues in the public budget as the income from the sale of natural resources, including oil, gas and mines is supposed to be spent on the development of the country instead of being injected into the current budget.

Moreover, the Budget Law stipulates that social media influencers with more than 500,000 followers who generate income from commercial activities will be subject to income tax.

Economy Minister Ehasan Khandouzi earlier communicated the directive on taxing influencers to the Iranian National Tax Administration.

“For INTA, it is not important whether the owner of the bank account is a dairy seller or a celebrity or an athlete. Artists will be exempt from tax if they earn less than 2,000 million rials [$4,484 per year]. All other celebrities who earn more must be taxed,” Manzour has been quoted as saying.

And as per a new approach employed by INTA, whistle blowing on tax evaders and other tax violations will be incentivized. The whistle blowing guidelines were communicated to tax offices on Feb. 27.

The public has been asked to log on www.intamedia.ir and report tax schemes and evasions and enjoy a special reward.

The Iranian National Tax Administration is expecting to add 900 trillion rials ($2.01 billion) to its income in the upcoming fiscal year (March 2023-24) by stemming tax evasion, Manzour said earlier.

“We expects our tax income to account for 65% of government revenues [next year],” he was quoted by IRIB News as saying.

According to the INTA chief, the government forwent 3,400 trillion rials ($7.62 billion) worth of tax in the last Iranian year due to exemptions as the total volume of tax earnings during the period stood at 3,060 trillion rials ($6.86 billion).