Tax Evasion & Avoidance at $4 Billion p.a.: INTA Chief

EghtesadOnline: The aggregate volume of tax evasion and tax avoidance in Iran stands at 1,000 trillion rials ($4 billion) per year, the head of the Iranian National Tax Administration said.

News ID: ۷۸۶۶۳۵

10 July 2021

“Tax gap [the difference between the amount of tax that should be paid to INTA and what is actually received] is being driven by 500 trillion rials [$2 billion] worth of tax evasion and as much worth of tax avoidance,” Omid Ali Parsa was also quoted as saying by ILNA on Wednesday.

The government should either double taxation or combat tax evasion to increase the share of tax revenues in GDP from 6-7%, he added.

Announcing that the obligatory use of approved sales register machines by businesses will be enforced by Jan. 20, 2022, the official said, “One million Point-of-Sale Systems will be connected to INTA. At present, a total of 840,000 devices have been linked to the administration’s database; they register two million sales transactions every night.”

He noted that 50% of self-declared tax returns filed by 1.6 million business owners have been accepted without being investigated by INTA.

Parsa also said 200 trillion rials ($800 million) in tax arrears assessed over two years have not been paid.

Q1 Tax Revenues Rise 70% to $2.37b

The Iranian National Tax Administration earned 590 trillion rials ($2.36 billion) in the first quarter of the current fiscal year (March 21-June 21), registering a 70% growth compared with the same period of last year.

The average goods and services Consumer Price Index in the year ending March 20, which marks the end of the fiscal 2020-21, increased by 36.4% compared with the corresponding period of the year before, according to the Statistical Center of Iran show.

According to Mohammad Masihi, the deputy head of INTA, the first quarter’s revenues from direct taxes and value added tax accounted for 330 trillion rials ($1.32 billion) and 260 trillion rials ($1.04 billion) of total earnings, respectively.

The budget law for the current fiscal year (March 2021-22) has projected more than 2,470 trillion rials ($9.88 billion) in tax revenues for the government, ISNA reported.

A total of 1,925 trillion rials ($7.76 billion) in tax were collected in the last fiscal year (March 2020-21), indicating a 37% increase compared with the year before.

According to Masihi, the government earned 107% of the budgetary income expected from taxation in the last fiscal year.

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

Direct tax earnings stood at 1,190 trillion rials ($4.76 billion) in the year ending March 20 to account for 136% of the projected income in the budget law and 46% more than direct tax revenues of the preceding year (March 2019-20).

“Tax on goods and services generated 735 trillion rials [$2.94 billion] for the government, accounting for 80% of the expected budgetary figure and 23% more than the corresponding revenues in the previous fiscal year,” he was quoted as saying by Fars News Agency.

Referring to the sub-sections of direct tax revenues, the official said taxation of legal entities generated 560 trillion rials ($2.24 billion) during the period under review, indicating a 27% growth year-on-year.

A total of 395 trillion rials ($1.58 billion) in income tax were collected as well, registering a 36% year-on-year rise.

Last fiscal year’s wealth tax income stood at 232 trillion rials ($928 million), showing a 178% increase compared with the year before.

Parsa blamed the coronavirus pandemic and decline in transportation and fuel consumption for a 14% decrease in petroleum products tax revenues and said INTA collected 60 trillion rials ($240 million) from taxation of petroleum products last year.