EghtesadOnline: Tax revenues to government public budget resources increased from 35.1% in the year ending March 2019 to 37.5% in the year ending March 2020, as tax revenues to current expenditure ratio also improved from 2.45% to 8.47% during the fiscal 2019-20.
The data were stated in a report by the public relations office of the Ministry of Economic Affairs and Finance on policies, operational plans and achievements of the Iranian National Taxation Administration over March 2019-20.
Budgetary goals related to tax revenues were realized by 102% and tax income increased by 29% in the last fiscal year (March 2019-20) compared with the year before to reach 1,411 trillion rials ($5.23 billion), ILNA cited the ministry’s report as saying.
By July 21, the government earned 86% of the projected tax revenues compared with the same period of last year. A total of 278,626 billion rials ($1 billion) in value added tax were paid to municipalities and rural administrator’s offices across the country from August 23, 2019, to July 21, 2020.
Transition from electronic to smart taxation system was INTA’s main strategy in the last fiscal year to develop the country’s taxation system, finance the government’s public budget and reduce reliance on oil revenues to put the budget in order, aside from improving tax equity, fighting tax evasion and increasing administrative efficiency and taxpayers’ satisfaction.
Array of Reforms
The Iranian National Taxation Administration pursued a variety of reforms in rules and regulations, and sought to provide infrastructures needed to conduct the modernization of taxation system, including:
Tax incentives were introduced for new companies willing to list on the stock market in the current fiscal year (March 2020-21). The proposal was floated by the Economy Ministry at the High Council of Economic Coordination—an ad hoc economic decision-making body comprising heads of three branches of power—and approved therein.
INTA will grant tax waivers to companies wanting to go public. Potential listed companies will be accountable only for tax liabilities in the previous fiscal year (March 2019-20) and INTA will not delve into earlier tax records.
INTA made starting a business easier by removing 15 requirements and unnecessary regulations and consequently accelerating starting business procedure by 53 days.
The Iranian Deeds and Properties Registration Organization was tasked with electronically putting at the Iranian National Tax Administration’s disposal all the information it needs to issue tax file numbers, also known as Economic Code in Iran, for real entities.
Prior to this new measure, there were 45 stages to register for tax file numbers, of which 44 could be completed in less than half an hour but the last stage, the authentication process, would take days and consequently hurt ease of doing business. In addition, business entities don’t need to secure the value added tax registration permit.
Putting together the bill on Direct Tax Code Overhaul and sending it to the government for approval in the month ending Feb. 19, 2020, was another significant major taken by INTA in the last fiscal year.
The bill includes new types of tax, namely the individual income tax or personal income tax (PIT) levied on wages, dividends, interest and other sources of income a person earns throughout the year, capital gains tax for residential property, vacancy tax; tax on luxury cars, etc. Amendments on tax exemptions and incentives have been envisioned in the proposal as well.
Taking measures regarding business owners' transactions processed through point-of-sale devices to improve transparency, drafting the roadmap toward modernizing the taxation system, including completing e-tax and designing i-tax systems, offering electronic services related to filing tax returns, tax statements, registration of taxpayers and their electronic payments through smartphones and reducing in-person communication between taxpayers and tax officers were other actions taken by INTA last year.
Outsourcing the execution of property transfer tax to notary public offices, delegation of the authority to carry out tax forgiveness, determining payment of tax liabilities in installments and value added tax law to directors general of tax offices across the country to shore up production, treat clients with respect and dignity, and promote decentralization were among significant measures undertaken by the tax administration over the past year.
INTA signed memorandums of understanding with over 100 executive agencies to complete a database on taxpayers’ information, their performance and properties by tapping into the data collected by these agencies. In its fight against tax evasion and fraud, the administration scrutinized suspicious banking information of 14,542 taxpayers last year, which led to issuing tax statements worth 317,480 billion rials ($1.17 billion) for them.
The execution of value added tax was simplified for taxpayers at the last point in a distribution chain: 4,500 tax regulations, including bylaws and guidelines, were surveyed; so far, 3,000 regulations have been streamlined, tax cases pertaining to 2008-17 were resolved over last year.
INTA also lent its support to economic operators in flood-stricken areas last year.
Following the outbreak of coronavirus, INTA took multifaceted actions to ease the burden on taxpayers and support businesses and individuals with cash flow problems, difficulties in meeting tax reporting or payment obligations.
For instance, the due date for the submission of Value Added Tax returns concerning the fourth quarter of last Iranian year (Dec. 22, 2019-March 19, 2020) was extended to May 20 and that of the first quarter of the current year (March 20-June 20) was extended to Sept. 5.
Deferral of tax payments for three months, allowing the payment of tax liabilities in installments over nine months since the first application for tax deferral is submitted and forgiving tax penalties were other measures introduced by INTA during the pandemic.