Kamel Taqavi-Nejad made the statement on the sidelines of the First Global Conference on Platform for Collaboration on Tax held at the United Nations Headquarters in New York from Feb. 14 to 16, IRIB News reported.
“That tax-to-GDP ratio should exceed 15% was the key topic of PCT conference sessions. The ratio stands at 8% in Iran compared with 40% in Scandinavian countries and 25% in the United States,” he said.
Taqavi-Nejad had earlier said 20% of taxpayers in Iran pay 80% of all tax, according to Financial Tribune.
The conference is a collaborative initiative of the United Nations, Organization for Economic Cooperation and Development, International Monetary Fund and World Bank Group.
Iranian economist Saeed Leylaz believes tax revenues would become a dependable source of income for the country, if they increase to 12% of the gross domestic product in three to four years to reach 1,500 to 2,000 trillion rials (about $30-40 billion) per annum.
“The incumbent government or future governments need to earn their revenues through taxation and that’s possible by eliminating tax exemptions and employing tax technology,” he said.
“Oil exports are unlikely to generate additional revenues in the next 10 years, regardless of the extent of price volatility. Obligatory expenditures will exhaust the sum realized from oil sales.”
Leylaz believes the best starting point for structural reform in the economy is by removing tax exemptions.
According to Chairman of Majlis Economic Commission Mohammad Reza Pour-Ebrahimi, a total of 70 trillion rials ($1.5 billion) were earned during the first eight months of the current fiscal year (started March 21, 2017) from newly identified economic operators.
Noting that tax evasion stands at 30-40% of total tax revenues in Iran annually, Pour-Ebrahimi said tax evasions costs the country an estimated 400 trillion rials (about $8.7 billion) every year.
Pour-Ebrahimi stressed that tax revenues would be the backbone of the next year’s budget.
According to the Central Bank of Iran's latest budgetary report, although tax revenues were estimated to hover around 880.6 trillion rials ($18.5 billion) during the first nine months of the current fiscal year (March 21-Dec. 21, 2017), they only reached 683.8 trillion ($14.5 billion), registering a 4.4% increase year-on-year.
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 336.3 trillion rials ($7 billion) during the nine months, registering a decline of 3.4% YOY.
Indirect taxes, including “tax on imports” and “tax on goods and services”, reached 347.5 trillion rials ($7.3 billion), indicating a 13.2% rise YOY.
The report also shows tax on imports generated 87.2 trillion rials ($1.8 billion), 15.5% more than last year’s corresponding period while tax on goods and services earned the government 260.3 trillion rials ($5.5 billion), up 12.5% YOY.
Value added tax, which is a subcategory of tax on goods and services, increased by 12.2% to reach 163 trillion rials ($3.5 billion).
According to the CBI report, revenues associated with the sales of oil and petroleum products reached 639.6 trillion rials ($13.5 billion), indicating a 51.6% YOY rise, but less than the projected 861.3 trillion rials ($18 billion).