Luxury tax had not been implemented for a long time, but with the approval of bylaws and the identification of people subject to this tax, it is about to be implemented, Car.ir reported.
However, the noteworthy issue is that only natural persons owning such cars are being taxed, as legal persons such as ministers, officials and parliamentarians have been excluded.
According to the rates envisaged in the fiscal 2020-21 budget law, a car worth 20 billion ($71,556) is liable to a tax equivalent to 150 million rials ($536) per year.
The total value of cars owned by a person and those under the person’s guardianship worth over 10 billion rials ($35,778), as well as double-cabin pickup trucks, is subject to luxury car tax. The information of these vehicles has been given to INTA by the General Command of the Law Enforcement of the Islamic Republic of Iran.
Luxury tax has been enforced, according to Article 42 of the VAT Law, according to Jahangir Rahimi, an official with INTA.
The official noted that for every year that a vehicle is in use, the tax is reduced by 10% and this will be considered up to a maximum of 60% (or six years).
According to statistics, 45% of luxury cars and 48% of people who are subject to this tax are living in Tehran, wherein lies the capital city.
Based on the information provided by the police, according to the law, the total number of cars of legal people is not a criterion and each car is assessed independently.
“As per INTA’s website, tax revenues accruing from luxury cars are estimated to reach 30 billion rials, but the amount collected ultimately remains to be seen,” Rahimi said.
With the change of government, the Iranian National Tax Administration is pursuing efforts to increase the country's tax resources more seriously. For instance, alongside the tax on luxury cars, luxury home tax measures are also being pursued by INTA.
Luxury Car Owners Must Pay Tax by Feb. 19
All luxury car owners are obliged to pay tax by the end of the current fiscal year’s 11th month (Feb. 19), the Iranian National Tax Administration announced.
People who themselves or their dependents under 18 years own a car worth over 10 billion rials should pay this tax while those with cars worth 10 billion rials or less are exempted, Ali Rostampour, an official with INTA, was also quoted as saying by Car.ir.
“Luxury car owners must pay tax on their cars until Feb. 19, or should file their objection before this date,” he added.
He explained that cars worth 10-15 billion rials should pay 1% tax, those valued at 15-30 billion rials 2%, cars worth 30-45 billion rials 3% and cars worth over 4.5 billion rials must pay 4% luxury car taxes.
The criterion of luxury car taxes for imported cars is the value ascertained by the Islamic Republic of Iran Customs Administration, which is also based on the reference exchange rate of customs duty, i.e., 42,000 rials per USD.
Currently, the latest imported cars belong to 2017 or earlier, so the basis for calculating the value of the car is IRICA’s import duty, while that of domestic cars, the factory price is considered the base price.
Rostampour stated that this provision was also in the fiscal 2020-21 budget, but it will be implemented for the first time this year.
Car value information is available through the news portal of INTA (https://www.intamedia.ir), where anyone can enter the system with a national ID and mobile number, and where their cars and values have been registered in that system. It also declares the amount of tax they must pay.
Car Imports to Resume in Fiscal 2022-21
As of the next fiscal year (starting March 21), car imports will resume in limited numbers.
The Majlis Joint Budget Commission has approved the import of 50,000 passenger cars and 10,000 heavy mining and road construction machinery in the next fiscal year.
According to Jan. 19 approvals, the commission has agreed to allow these imports at a tariff approved by the Cabinet. Proceeds from this issue will be spent on financing the rail network and establishing new railroads, including for regular and high-speed urban trains, and for completing semi-finished rail and road construction projects of deprived areas and for repairing accident-prone hotspots, ISNA reported.
These undertakings will be ceded to the private sector, including natural and legal persons.
As per the ratification, in the next fiscal year, the import of urban and suburban buses, trucks, refrigerated trailers, wagons and refrigerated vans will also be allowed at the tariff approved by the Council of Ministers.
Revenues amounting to 600 trillion rials ($2.15 billion) are expected from this source.