Iran Gov’t to Tax POS Transactions

EghtesadOnline: The government will start levying taxes on business owners' transactions processed through point-of-sale devices to combat tax evasion, the head of Iran National Tax Administration announced.

News ID: ۷۸۴۰۱۹

16 September 2018

"Considering the need to organize POS devices active inside and outside Iran and create a framework for them to prevent tax evasion and reduce dubious bank transactions, a coalition has been formed with the participation of CBI, the Ministry of Information and Communications Technology, law enforcement agencies and INTA to establish a clear system and software for banks' POS devices," Seyyed Kamel Taqavinejad also told IBENA on Saturday.

POS devices have long been used by private businesses to avoid declaring their true income. Various guilds, especially private physicians, have also come under fire in recent months due to their practice of asking for cash in return for their services.

As the INTA chief pointed out, there are currently no laws requiring installment of bank POS devices in shops or clinics, but people and officials have focused attention on this issue since many service providers require cash, sometimes in high amounts, in return for their services, Financial Tribune reported.

Taqavinejad noted that POS devices are outside INTA jurisdiction since they are operated by Shaparak, a subset of the central bank, that handles Iran's payment clearing systems. But he added that his organization started collaborating with the central monetary regulator to curb tax evasion through this avenue.

According to the head of tax administration, seven specific guilds, especially restaurants, have been prioritized due to their higher levels of tax violations.

"The initiative to levy tax on bank POS transactions will be implemented from the next [Iranian] year [starting March 22], as infrastructures required for the plan are currently being readied in cooperation with other entities for its successful implementation," he said.

Taqavinejad stressed that after processes related to POS tax collection are complete, businesses will "justly" pay up to four or five times what they are paying the government at present.

"The prevention of tax evasion in this area will increase the country's tax incomes fairly because many businesses did not declare their POS revenues whereas others had strictly cash sales," the INTA chief said, praising the businesses that have contributed to the country's economy.

On Saturday, a member of parliament also confirmed the initiative and said its full implementation can prove immensely influential.

"We have had cases where an individual would benefit to the tune of 1 trillion rials ($7.55 million) but has only declared 100 billion rials ($755,000) in their books and tax returns," Abdolreza Mesri, a member of Majlis Plan and Budget Commission, said.

"Levying tax on POS devices is a method of deciding the veracity of businesses' financial reporting and does not amount to drumming up baseless taxes," he also told ICANA, the official news outlet of the parliament.

He pointed out that using the POS devices as a target is a good idea since virtually anybody who applies for one is a business owner, as ordinary citizens have no use for them.

Therefore, according to Mesri, combing through the transactions of POS devices is only a tool for verifying the veracity of tax returns and the mere possession of such a device or a bank card does not make a person subject to taxation.

"Unfortunately, those who evade the law gain profits. Justice should reign in the taxation system, lest a person with an income of 100 billion tomans avoids taxes while a person with sales income of 1 million tomans is subject to taxation," he said.