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IRANIAN INCOME TAX FOR NATURALPERSONS
The tax rates of the income of natural persons, except those for
whom different rateshave been determined in the law, are as in the
income tax table below:
Annual taxable income / Tax %:Rls. 0-30,000,000: 15%Rls.
30,000,000-100,000,000: 20%Rls. 100,000,000-250,000,000: 25%Rls.
250,000,000-1,000,000,000: 30%Rls. 1,000,000,000 and over: 35%.
Who is liable to pay taxes in Iran?
1. Companies and all legal entities of Iranian nationality with
respect to all incomeearned in Iran or abroad.2. Every natural
person of Iranian nationality residing in Iran, with respect to
incomeearned in Iran or abroad.3. Every natural person of Iranian
nationality residing abroad, with respect to all incomeearned in
Iran.4. Any non-Iranian natural person or legal entity with respect
to income earned in Iran,as well as income accrued through the
transfer of a license or right, provision oftraining and technical
assistance, and royalties on movie films.
IRAN CORPORATE TAX RATECorporate tax rate in Iran is a flat
25%.
How are corporate taxes calculated?According to Article 105 of
the Law, the total income of companies and other legalentities,
earned from their profitable activities in Iran or abroad shall be
subject to a flatrate of 25% after deduction of losses and
exemptions.
Tax Year in Iran
For a corporate entity the tax year is defined as an Iranian
year starting from 1st ofFarvardin (21st of March) and ending on
the last day of Isfand (20th of March).However, in the case of
legal entities with different financial year it is possible
toassume their financial year as the basis for tax assessment. The
deadline for submittingthe returns and accounting records is 4
months after the end of the financial year.
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What type of tax incentives are there for investments and
activities in theFree Trade-Industrial Zones in Iran?
According to Article 13 of the Law Concerning the Manner of
Administering the FreeTrade-Industrial Zones of the Islamic
Republic of Iran, natural persons and legal entities
economically active in such areas, are exempt from payment of
direct income tax for aperiod of 15 years, from the date of
operation as stated in their license.
Are there safeguards against being re-taxed in the Direct
Taxation Act?Iran has concluded agreements on avoidance of double
taxation and tax evasion with alarge number of states. The tax
arrangements made in such pacts are applicable andbinding under the
Iranian law.
Are the activities of agents of foreign companies in Iran also
subject tocorporate tax?Branches and agencies of foreign companies
which have been registered according tothe relevant regulations in
Iran, and by virtue of their articles of association are
notauthorized to engage in profitable activities but can do
marketing and collect economicinformation, are not liable to any
taxation on the sums received from the mothercompany as a revolving
fund. However, if it is proven that the said branches andagencies
are engaged in profitable activities in Iran and are acquiring an
income therefrom, the sums earned shall be subject to corporate
taxation according to therespective rules.
What regulations define taxes on salaries of foreigners working
in Iran
subject to?
According to theDirect Taxation Act, every natural person
residing in Iran, shall be, with certain
exceptions, liable to taxation with respect to the income earned
as salary in Iran or abroad.
Salary of the employee (whether Iranian or foreign national)
received for working in Iran, as
well as the fringe benefits related to the job are liable to
taxation on the basis of the
progressive rates foreseen in Article 131 of the Act. Income
earned in cash or in kind by any
natural person in the service of another person (natural or
juridical) against his working power
for employment in Iran on either a period of time or piecework
basis shall be liable to salary
tax. According to Article 57 of the Direct Taxation Act, the
total annual income of the employee
shall be subject to taxation, and after deduction of the amount
equal to the salary tax
exemption (mentioned in Article 84 of the Act), a 10% tax rate
shall apply up to the amount of
Rls. 42,000,000 (forty two million rials), and for the amounts
exceeding the said sum, the tax
rates prescribed in Article 131 of the Act shall apply. The
Iranian government may prohibit exit
of the tax debtors from country. By virtue of Article 202 of the
Direct Taxation Act, the persons
owing more that 10,000,000 rials as tax debts are subject to
such leave restriction. The Iranian
or foreign managers of companies are held liable for outstanding
tax debts of the related entity
created during their term of office. They may also be disallowed
to leave the country, unless the
payment is made or an acceptable guarantee is placed.
