Tax Accounts for 40% of Iran's Public Budget, Less Than One-Third of Gov’t Revenues

EghtesadOnline: Tax revenues account for 40% of the government’s public budget, the head of Iranian National Tax Administration said.

News ID: ۷۸۴۰۱۰

15 September 2018

“INTA collected 366 trillion rials ($2.69 billion) in tax and duties over the first five months of the current Iranian year (March 21), registering a 10% rise compared with the similar period of last year,” IRNA also quoted Kamel Taqavinejad as saying on Tuesday.

Noting that over 6,000 suspicious transaction reports and 500 shell companies were identified last year, the official said so far 1.9 million new taxpayers have been identified, Financial Tribune reported.

Nader Jannati, the deputy head of Iranian National Tax Administration, sayid, “The issue of tax evasion in Iran is disturbing.”

According to Pedram Soltani, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture, over 1,500 trillion rials ($11 billion) worth of economic transactions in Iran’s economy are carried out under the radar of tax system.

> Raising Tax on Guilds, Cutting it for Manufacturers

“The tax administration has reached an agreement with 1.7 million taxpayers of different guilds on raising their current year’s performance tax by 5% compared to that of last year,” Taqavinejad was quoted as saying by ILNA in July.

This is while 95% of the manufacturing sector will be subject to lower tax rates in a move to support domestic production, he added.

According to President of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei, the Iranian National Tax Administration has recently approved a 5% cut in the industrial sector’s tax rate.

> 17.5% Rise in Tax Revenues Over 4 Months

The Central Bank of Iran’s latest budgetary report released on Monday shows the government earned 348.8 trillion ($3.27 billion) in tax revenues during March 21-July 22 to register a 17.5% increase year-on-year.

The target for tax revenues during the four-month period was estimated at 482.7 trillion rials ($4.53 billion) as per the budget law.

In contrast, revenues associated with the sales of oil and petroleum products during the same period reached 419.6 trillion rials ($3.93 billion), indicating a 60.7% rise YOY, meaning tax revenues were more or less on par with those from crude oil.

The target for oil revenues during the period was estimated at 343.2 trillion rials ($3.22 billion) as per the budget law.

The government’s tax revenues consist of returns from direct and indirect taxation. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.

Overall, direct tax revenues stood at 152.4 trillion rials ($1.43 billion) during the four months, registering a decline of 4.6% YOY.

Indirect taxes, including “tax on imports” and “tax on goods and services”, reached 196.4 trillion rials ($1.84 billion), indicating a 43.2 % rise YOY.

The CBI report also shows tax on imports generated 50 trillion rials ($469.48 million), 98.3% more than the year before while tax on goods and services earned the government 146.4 trillion rials ($1.37 billion), up 30.8% YOY.

According to the Islamic Republic of Iran Customs Administration, a total of 11.55 million tons of non-oil goods worth $15.17 billion were imported into the country, registering a 4.5% YOY.

Value added tax, which is a subcategory of tax on goods and services, increased by 15.4% to reach 92 trillion rials ($863.84 million).

Revenues from sales of bonds–another major source of income for the Iranian government–stood at 314.5 trillion rials ($2.95 billion) during the same four-month period–80.8% more compared to last year’s corresponding period.

The above figures suggest that only less than one-third of government revenues come from taxation.

Tehran accounted for 58% of last year’s tax revenues, according to the director of Tax Administration of Tehran Province, Mohammad Reza Nouri. Out of 4.5 million taxpaying entities in the country, about 1.2 million are based in Tehran.

According to Rasoul Saraeian, the head of Information Technology Organization of Iran, 100% of tax returns this year were carried out electronically.

Referring to the outstanding improvement of Iran’s ranking in the United Nations’ latest E-Government Development Index, he said, “Higher levels of e-government development can improve transparency and keep a check on rent-seeking behaviors.”

Iran’s place in the United Nations’ EGDI, which measures the use of information and communications technologies to deliver public services, improved 20 spots from 106th in 2016 to 86th in 2018.

Iran was one of the 17 countries among the 193 UN member states that transitioned from middle to high EGDI level group.