EghtesadOnline: Iran is taking the final steps in its transition to a modern, streamlined system of taxation. By implementing the electronic execution of taxation procedures, the "Comprehensive Taxation Plan" aims to help widen the tax base, identify potential taxpayers and minimize tax evasion.
Kamel Taqavinejad, the ex-chairman of Iran National Tax Administration and the soon-to-be deputy health minister, has expounded on the progress made on each of these goals in an interview published on INTA's website. According to Financial Tribune, a translation of his remarks follows:
The Comprehensive Taxation Plan is a turning point based on information and communications technology. It incorporates all organizational structure, pillars and procedures, as well as rules and regulations. It is devised to transform the taxation system from a traditional into a modern, contemporary system, which means that all infrastructures will undergo a meaningful change.
How It All Started
The Comprehensive Taxation Plan was put on the agenda of the Third Five-Year Development Plan (2001-6) in 2004.
Deloitte, one of Canada’s leading professional services firms, providing audit, tax, consulting, financial and risk advisory services to local and international clients, won the consultancy tender launched by the office of the Comprehensive Taxation Plan the following year.
With the help of in-house and outsourced Iranian and foreign experts, INTA designed the comprehensive taxation roadmap in five chapters and 32 projects.
Bull SAS, a French-owned computer company of worldwide recognition in the public sector for its business and technical expertise, particularly in aligning customs and tax systems to new international demands, won the international tender for the designing and pilot implementation of the project.
Yet, due to reasons beyond the Ministry of Economy and INTA’s control, the contract with the French company was not signed before March 2009. Notably, the company’s contract terminated last June and all source codes are now at the disposal of INTA.
Currently, the integrated software of the plan is INTA’s biggest information and communications technology asset and part of Iran’s cyber capital.
The plan's macroeconomic goals include boosting tax revenues through anti-tax evasion measures, eliminating unnecessary exemptions, identifying new taxpayers and accelerating tax payment procedures, in addition to mechanizing and streamlining taxation procedures.
Increasing economic transparency and public awareness about how tax statements are presented is the most important advantage of the plan.
Tax statements, payments and other services will go online and consequently help reduce intra-city travels and related costs when the plan is implemented completely.
Another plus point of the plan is the reduction of interaction between taxpayers and tax assessors, which will decrease the likelihood of collusion or abuse of official capacity. This would definitely improve relations between people and the government, leading to the satisfaction of taxpayers.
With an electronic taxation mechanism, people will gain an integrated perspective of the performance of tax officials. Identifying, registering and managing engagement with taxpayers will help facilitate the centralization of information needed by government organizations, track high-risk taxpayers systematically and control all stages of taxation.
The database of the Comprehensive Taxation Plan is of utmost importance for preventing tax evasion, fighting money laundering and promoting taxation equity. It includes taxpayers’ identification information as well as financial and monetary information of real and legal entities, their capital and real estate details.
Stemming Tax Evasion
By using the Comprehensive Taxation Plan database, INTA managed to recover as much as 220 trillion rials ($1.83 billion) in tax evasion over the past year.
For instance, tax collected from one individual alone amounted to the total amount of tax gathered from 1.7 million citizens. So far, as many as 1.3 million new taxpayers have been identified, of whom about 600,000 were registered in March 2017-18 alone.
In the execution phase of the plan, the “Risk Assessment Database” will be linked to the “Auditing” section of the integrated taxation software. Four exclusive websites have also been created and linked to this database.
The first website provides a search function for taxpayers’ information and is used by all departments. The second website offers the chance of monitoring and adding data to tax dossiers. It allows the editing of taxpayers' registered information, repeated supervisory reporting and retrieval of information. The third website is called “taxpayers’ documents’ probe and follow-up”. And the last website is dedicated to supervising transactions via information provided by banks.
Information is the building block of taxpayers’ database. As many as 40 government agencies and organizations, including the Islamic Republic of Iran Customs Administration, National Organization for Civil Registration, Company Registration Office, Iran Post, the Central Bank of Iran, the Central Insurance of Iran, the Securities and Exchange Organization, Tehran Municipality, the Ministry of Roads and Urban Development and the Statistical Center of Iran, have been tasked with supplying information needed by INTA. Thus far, 1.3 billion records have been compiled in INTA’s database.