Noting that tax evasion stands at 30-40% of total tax revenues in Iran annually, Mohammad Reza Pour-Ebrahimi added that an estimated 400 trillion rials (about $8.7 billion) are lost in tax evasion by the country every year, ILNA reported.
According to Chairman of Iranian National Tax Administration Kamel Taqavinejad, 20% of taxpayers in Iran pay 80% of all tax while about 65% of all taxpayers are either exempt or pay less than 10 million rials ($266) in tax.
The government is counting on earning 1,287 trillion rials (about $28 billion) in tax revenues in the next fiscal year (March 2018-19) as per the budget bill submitted to the parliament in December, according to Financial Tribune.
The figure shows an 11% rise compared with the budget law of the current year (ending March 20).
The budget bill has considered an 8% rise in revenues from value added tax, a subcategory of tax on goods and services, while the VAT rate will remain unchanged compared with the current year’s rate to stand at 9%.
The government’s tax revenues consist of its returns from direct and indirect taxation. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.
As per the budget bill, revenues projected from tax on legal entities stand at 360.927 billion rials ($7.8 billion), indicating a 2% decline compared with the budget law of the current year.
Predicted proceeds from income tax are at 193,958 billion rials ($4.2 billion), showing a 13% rise while revenues from wealth tax arre estimated to reach 34,906 billion rials ($763 million), marking an 18% increase compared to the current year’s budget.
Indirect taxes include “tax on imports” and “tax on goods and services”.
The government expects to earn 230,190 billion rials ($5 billion) out of tax on imports, 32% more than what is projected in the current year’s budget and 467,208 billion rials ($10.2 billion) out of tax on goods and services, marking an 11% increase.
Pour-Ebrahimi said tax revenues would be the backbone of next year’s budget.
According to the latest report of the Central Bank of Iran, the government earned 600.6 trillion ($13.1 billion) during the first eight months of the current fiscal year (March 21-Nov. 21), registering a 3.1% increase year-on-year.
Direct tax revenues stood at 299.8 trillion rials ($6.5 billion) during the eight months, registering a decline of 3.4% YOY. Indirect taxes reached 300.8 trillion rials ($6.6 billion), indicating a 10.5% rise YOY. Tax on imports generated 69.6 trillion rials ($1.52 billion), 11.2% more than last year’s corresponding period while tax on goods and services earned the government 231.2 trillion rials ($5 billion), up 10.3% YOY. Value added tax increased by 18.4% to reach 160.2 trillion rials ($3.5 billion).
Iran's average tax-to-GDP ratio has improved from 5.4% in the fiscal 2012-13 to 7.9% in 2016-17. However, the ratio is still low compared to that of many developed countries.