This article applies only to Iran.
Nowadays paying taxes is considered every citizen’s responsibility. By paying taxes, citizens help the progress and development of the country. Taxes are the transference of part of the people’s income to the government or part of economic activities’ profits which is given to the government because it is due to the government that people are allowed to do economic activities.
Taxes are divided into two types:
- Direct taxes: are received directly from the income that people receive.
- Indirect taxes: refer to taxes which are added to the price of products and services and are somehow imposed on buyers and customers, such as the value added tax.
Direct taxes consist of the following:
Taxes on income
- Taxes on income from payment of rent
- Taxes on income from salary
- Taxes on income from work
- Taxes on real person’s income
- Taxes on agricultural income
- Taxes on accidental income
Taxes on property
- Tax on inheritance
- Right of stamp
Indirect taxes consist of the following:
Taxes on consumption and sales
- Tax on oil products
- Tax on industrial and medical alcohol production
- Tax on non-alcoholic drinks
- Tax on cigarette sales
- Tax on cars
- 15% tax on domestic cars
- Tax on caviar sale
- Tax on automatic phones and international services
- Tax on audio and video recording
- Tax on income
- Customs rights
- Commercial profits
- 30% of imported cars’ costs
- 15% registration right
Other than the mentioned types of tax, there exists also another kind of tax which has little history in our country’s tax system, and that is the value added tax.
Value added tax (VAT) is a kind of indirect task, which the customer or buyer has to pay when they pay for the product or service, and the seller is obligated to pay this amount to the state treasury. Since the seller also pay this tax when they first buy the products, but are not considered customers, they have the right to deduct the incoming value added tax from the entire value added tax they have paid, and only pay that amount to the government. In return, the government provides services and uses these taxes for special costs. This tax is the most important income of the province treasury, municipalities, and central governments, and are usually transferred to the state treasury which divides it among different provinces according their population.
Currently, the amount of the value added tax is 9% which is mentioned in the receipts issued by real and legal persons and is calculated in the final price of the products and services.
According to law, in some cases, exemptions from these taxes exist which are as follows:
Article 12 of the value added tax on the following services and products and their import are exempted:
- Unprocessed agricultural products
- Living livestock and poultry, fish, bees and silkworms
- All kinds of fertilizers, pesticides, seeds and saplings
- Bakery flour, bread, meat, sugar cube, sugar, beans and soybean, milk, cheese, vegetable milk and baby formula
- Books, printed matter, notebooks, all kinds of printing, typography and press papers
- Offering products which are given by grants to the ministries, government institutions and general private organizations with the certification of the ministers and receivers of the gifts.
- Products which are brought into the country by travelers for personal use up to the amount of exemption according to import and export rules. More than that amount is subject to taxes.
- Immoveable properties such as land
- All kinds of drugs, medical health products, health services (humans, animals and plants) and rehabilitation and supportive services.
- Services subject to the income tax laws, specifically direct taxes.
- Banking and credential services of banks, institutions and credential cooperatives, authorized interest-free funds, and the cooperative fund.
- Public transportation services and road, rails, air, and sea passenger transports within cities and between cities.
- Handmade carpet
- All research and educational services according to the joint proposition by the ministry of research sciences and technology, economic affairs, and finances, health, treatment and medical education, education and work and social affairs, which will be passed by the ministers within 6 months.
- Livestock and poultry food
- Radars and aviation navigation aid equipment specific to airports, according to the list which has been procured by the cooperation of the ministry of road and transportation and the ministry of economic affairs, and approved by the ministers within 6 months of it being passed.
- Items with purely defensive use (military and police) and defensive, according to the list proposed by the ministry of defense and support of armed forces and the ministry of economic affairs, and approved by the minister. The mentioned list will be put to execution for the first period of taxes after being passed.
Article 13: export of products and services to foreign countries through official exit points are not subject to tax laws and taxes paid for them will be returned upon presentation of the exit license issued by Customs.
Remark- taxes paid for products brought by foreign travelers which have not been purchased more than 2 months before entering the country are subject to return of taxes upon presenting respective documents.
If you wish to have a reliable and convenient trade, we advise you to consult experts in the field. Sarasa Law Office is here for you.