Mehran Maharamian, the CBI deputy for innovative technologies, said, "Almost 4.7 million terminals and gateways had failed to provide the Iranian National Tax Administration ID information needed to file tax returns. Their profile has been completed, validated and submitted to INTA," the CBI website quoted him as saying on Sunday.
The plan to tax POS transactions became law two years ago but has gone through ups and downs ostensibly due to technical issues. The law was passed to curb tax evasion by businesses particularly in the high income brackets.
As of January 1 applicants for POS or other payment gateways have to first file tax returns and those already owning the payment instrument are automatically eligible for tax,
The central bank is hopeful that the new rules would help “significantly curb” illegal activities using rented payment gateways. "This will play a key role in reducing money laundering and online betting because owners of gateways will be held responsible and must pay tax,” Maharamian said earlier.
Guilds have long been under criticism for demanding cash from customers and ignoring banking channels to cheat the taxman. This has rendered tracking their income difficult. Tax officials say by looking into transactions via POS the veracity of tax returns can be enhanced.
POS terminals are the most popular payment instrument in Iran. Shaparak's data over the types of payment instruments used in the month to February 18, 2021, shows that POS devices were at the top with 75.95%.
The number of POS devices has increased in recent years. However, the number fell 0.4% last month, after the new rules came into effect.
Overhauling Tax Regime
INTA has pursued reforms in rules and regulations and carried out a major overhaul of the taxation system. The popularity of payment terminals has made them a proper tool for enhancing taxation, preventing tax-evasion and shoring up the government's finances.
Total tax earnings as per the fiscal 2021-22 budget bill is set at 2,515 trillion rials ($10 billion), including 591 trillion rials ($2.3b) from tax on legal entities, 491 trillion rials ($1.9b) income tax, 238 trillion rials ($915 million) wealth tax, 235 trillion rials ($903m) import tax and 957 trillion rials ($3.8b) goods and services tax.
As per data, the ratio of tax revenue in the last fiscal year (March 2019-20) to GDP (at current prices) was 4.2%.
A total of 1,410 trillion rials ($5.6b) was from taxes last year, of which 820 trillion rials ($3.21b) came from direct taxes and 590 trillion rials ($2.31b) from GST.
Latest figures reveal that the government earned 1,314 trillion rials ($5.05b) in tax in the eight months to Nov. 20, which accounted for 64% of the amount forecast for the period in the national budget.