Taxman Will Look Closer at Banking Transactions

EghtesadOnline: In a directive to banks and credit institutions, the Central Bank of Iran obliged lenders to report banking transactions of tax payers to the Iran National Tax Administration on a monthly basis.

News ID: ۷۸۴۶۶۰

14 May 2019

The rule, enshrined in this budget (March 2019-20), seeks to help promote transparency in banking transactions, alleviate money laundering and control tax evasion, IRNA reported.

As per law, on INTA’s request banks and credit institutions should provide data about bank accounts and transactions (both interbank and intra-bank) of tax payers. In addition, the law allows the CBI to freeze bank accounts of clients lacking a national ID number.

Likewise, the CBI is required to set a ceiling on money transfers and report all transactions above the threshold. The limits can be universal (same threshold for all) or subject to change on a case-by-case basis, Financial Tribune reported.

In order to transfer money above the specified level, bank customers are required to mention the “reason” for the transfer and, if necessary, provide documents to support their claim.

The budget tasks INTA with collecting at least 30% of overdue taxes in the previous fiscal (2018-19) related to purchase invoices and point-of-sale devices.

Within its legal jurisdiction, INTA can impose fines equal to 2% of the total value of deposits held with banks and credit institutions if they refuse to comply.

Boosting Production

Supporting the motion, the Majlis Research Center says the rules will tighten the regulator’s supervisory power over cash flow that by extension reflects the flow of goods and services.

Among other things “the measure will help prevent criminal activities related to money laundering and disruption in the economic system”.

The initiative should help boost tax revenues and create the conditions for levying tax on foreign exchange, gold and housing deals -- eventually redirecting liquidity to productive sectors.

In the past the regulator did not have access to data on inter-bank transactions. The new rules allow overseeing both interbank and intra-bank operations.

The move is in line of with the Sixth Five-Year Economic Development Plan that calls on the government and policy and decision makers to develop national strategies and pass laws to augment the transparency of economic and administrative sectors.

Law stipulates that Iran should be among the top six countries in the region based on the Corruption Perception Index (CPI) and raise its score to 50 (out of maximum 100) by the end of the plan in March 2022.

Iran’s CPI score was 28 out of 100 in 2018 as reported by Transparency International. Iran was demoted from 130 in 2017 to 138 in 2018 among 180 surveyed countries.

CPI uses a scale of zero to 100 to rank countries, with zero being highly corrupt and 100 is very clean.

Corruption Index in Iran averaged 26.50 points from 2003 until 2018, reaching an all time high of 30 points in 2003 and a record low of 18 in 2009.

Transparency is a non-governmental anti-corruption organization. It rates countries on how corrupt their governments and public services appear to be. The ratings are based on findings by experts and public opinion studies.