Up until last week 120,000 POS machines of businesses were deactivated, according to Mehran Maharamian, the CBI vice governor for innovative technologies.
"The blocked POS devices belonged to those who did not file tax returns, whose tax profiles were incomplete or people who were dead," the CBI public relations office quoted him as saying.
The POS owners had failed to provide the Iranian National Tax Administration identity information needed to file tax returns.
As per earlier announcements, the law to tax transactions via POS machines comes into effect on Jan. 20. Businesses wanting to apply for POS or other payment gateways have to first file tax returns and those who already own the gadget will be automatically liable to pay tax.
Maharamian pointed to 3.8 million payment instruments that lack tax returns, saying that tax papers “will be created for their owners automatically in coordination with INTA.”
The plan to tax POS transactions became law two years ago but has gone through adjustments ostensibly due to technical issues. The law was passed to curb tax evasion and fraud particularly in the high income brackets like lawyers, physicians and realtors many of them infamous for evading tax.
According to Maharamian, the new rules would “significantly curb” illegal activities using rented payment gateways. "It will play a key role in controlling illegalities mainly money laundering and online betting because owners of the gateways will be held accountable and must pay tax.”
Assuring the Public
He assured the public that in implementing the new tax rules priority is for POS machines and online payment gateways with high turnover. "INTA has reassured us that implementing the law will not hurt SMEs.”
On the fate of those who own a POS device but do not use it for commercial and business purposes, the CBI official said they have to communicate with INTA. Officials say closer monitoring of transactions via POS machines will enhance transparency and the veracity of tax returns.
With persistent reports of rising tax evasion and tax exemptions, the government is struggling to curb rampant tax dodging that costs the country billions of dollars every year.
Controlling the operation of POS devices in and outside Iran and tightening supervision over dubious bank transactions was put on the agenda in collaboration with administrative bodies, namely the CBI, the Ministry of Information and Communications Technology, law enforcement agencies and INTA.
Cooperation between INTA and CBI is crucial because control over POS devices is beyond INTA’s purview and is the responsibility of Shaparak, the nationwide electronic payment settlement network affiliated to the CBI.
The new plan is in line with the so-called ‘smart taxation’ system announced by INTA. It says transition from electronic to smart taxation is a process to improve the tax ragtime, help government funding, reduce overreliance on oil revenue, promote fair tax collection and fight fraud.