EghtesadOnline: The government earned 852,000 billion rials ($3.15 billion) in tax revenues during the four months to July 22, which account for 93% of the sum predicted in the budget for the period and shows a 169% increase year-on-year.
The earnings from taxing companies and legal entities stood at 250,000 billion rials ($925.92 million), which account for 124% of the sum projected in the budget for the period under review and indicates a 204% rise compared with the same period of last year, Fars News Agency reported.
The Iranian National Tax Administration earned 167,000 billion rials ($618.51 million) from taxing civil servants and workers (income tax), which constitute 91% of the budget’s projected figure and is 134% more than the earning of the corresponding period of last year.
Wealth tax revenues stood at 33,000 billion rials ($122.22 million) over the period.
Tax on goods and services, which also include value added tax earnings, hovered around 402,000 billion rials ($1.48 billion). Earnings from tax on goods and services are 96% of the budgetary requirements and 207% more than the similar period of last year.
Fiscal 2020-21 Taxation in Review
A total of 1,925 trillion rials ($7.12 billion) in tax were collected in the last fiscal year (March 2020-21), indicating a 37% increase compared with the year before.
According to Mohammad Masihi, the deputy head of INTA, the government earned 107% of the projected income from taxation in the last fiscal year.
The government’s tax revenues consist of its returns from “direct taxation” and “tax on goods and services”. Direct taxes include three groups of “tax on legal entities”, “income tax” and “wealth tax”.
Direct tax earnings stood at 1,190 trillion rials ($4.4 billion) in the year ending March 20, to account for 136% of the projected income in the budget law and 46% more than direct tax revenues of the preceding year (March 2019-20).
“Tax on goods and services generated 735 trillion rials ($2.72 billion) for the government, accounting for 80% of the expected budgetary figure and 23% more than the corresponding revenues in the previous fiscal year,” he said.
Referring to the sub-sections of direct tax revenues, the official said, taxation of legal entities generated 560 trillion rials ($2.07 billion) during the period under review, indicating a 27% growth year-on-year.
A total of 395 trillion rials ($1.46 billion) in income tax were collected as well, registering a 36% year-on-year rise.
Last fiscal year’s wealth tax income stood at 232 trillion rials ($859 million), showing a 178% increase compared with the year before.
The official blamed the coronavirus pandemic and decline in transportation and fuel consumption for a 14% decrease in petroleum products tax revenues and said INTA collected 60 trillion rials ($222 million) from taxation of petroleum products last year.
“Self-declaration of tax returns accounted for 70% of the country’s tax revenues, which allowed INTA to focus on improving tax collection from major taxable persons. INTA also managed to collect 100 trillion rials [$370 million] from overdue tax returns,” Omid Ali Parsa, the head of the Iranian National Tax Administration, was quoted as saying by Mehr News Agency recently.
Tax Evasion and Avoidance
Parsa put the aggregate volume of tax evasion and tax avoidance in Iran at 1,000 trillion rials ($3.7 billion) per year.
“Tax gap [the difference between the amount of tax that should be paid to INTA and what is actually received] is being driven by 500 trillion rials [$1.85 billion] worth of tax evasion and nearly the same amount as tax avoidance,” he was quoted as saying by ILNA on Wednesday.
The government should either double taxation or combat tax evasion to increase the share of tax revenues from GDP from 6-7%, he added.
Noting that the obligatory use of approved sales register machines by businesses will be enforced by Jan. 20, 2022, the official said, “One million Point-of-Sale Systems will be connected to INTA. At present, a total of 840,000 devices have been linked to the administration’s database; they register recordings of two million sales transactions per day.”
The INTA chief said 50% of self-declared tax returns filed by 1.6 million business owners have been accepted without any question by INTA.
Parsa also said 200 trillion rials ($740 million) in tax arrears assessed in two years have not been paid.