Dayarayan Value of unlisted companies.

Real State Tax: Final transfer of

institution but interest paid or
nonresidents. Interest paid to
real properties as well as the transfer nonresidents is subject to a 5%
of goodwill is subject to a fixed rate. special defense contribution
The basic of taxation shall be deducted at source.
Iran Highlights taxable value in case of real state at Royalties- Royalties paid to
5% of the so-called and 2% value nonresidents for the use of rights in
Currency: Iranian Rials(IRR)
received by the owner or possessor Iran are subject to a final
Foreign exchange control: No
of the right in case of goodwill. withholding tax of 5% for
Accounting principles/financial Losses-Tax losses can be carried manufacturing and governmental
Statements: IAS/IFRS. Financial
forward and set off against taxable section and , and 7.5% on all other
Statements must be prepared
income of subsequent years without royalties. These rates may be
annually.
any time limit. reduced under a tax treaty. Royalties
Principal business entities: These
Tax rate-Companies, includes all paid to nonresidents for the use of
are the public and private limited
kind of corporate bodies, and are rights outside Iran are exempt from
liability company, partnership and
subject to corporation tax at affixed withholding tax. There is no
branch of a foreign corporation.
rate of 25%. withholding tax on the payment of
Corporate taxation: Certain types of income (i.e. royalties by a resident company to
Residence- A Company is resident
dividends, interest and rent) for another resident company.
in Iran if its management and
foreigners residing abroad subject to Branch remittance tax – No
control is exercised in Iran.
a special defense contribution at the Other taxes on Corporations:
Registration in Iran is not decisive.
rate of 5% and 7.5% respectively. Stamp duty – Capital duty is
Basis-Resident companies are taxed
Surtax – No payable on authorized share capital
on worldwide income. Foreign-
Alterative minimum tax - No and the issuance of shares at a rate
source income derived by tax
Foreign tax credit- Relief for taxes of 0.2%.
resident companies is subject to
paid abroad is granted against Iran Payroll tax- Employers are required
corporation tax in the same way as
tax due in the form of a tax credit. to withhold personal tax on the
Iran source income.
The relief is given unilaterally salaries of employees under the
Branches are taxed the sane way as
regardless of the existence of a tax PAYE system.
domestic companies.
treaty. When a treaty applies, the Real property municipal tax – Tax is
Taxable income-Corporation tax is
treaty provisions apply if more imposed annually on the
imposed on business profits; interest
beneficial. governmental value of immovable
and discounts; rents, royalties,
Participation exemption- See under property.
remunerations or other profits from
"Taxation of dividends", see also Social security – Employers must
property, and net consideration in
"Capital gains". make social insurance contributions
respect of trade goodwill. Expenses
Incentives – Special taxation amounting to 23% of gross salary.
incurred for the production of
regimes exist for ship-owning The maximum amount of annual
income are tax deductible.
companies that have Iran flag earning on which the contributions
Losses brought forward or
vessels and ship management are payable is variable and for year
surrendered by company can be set
companies. ended March 21, 2009 is about Euro
off against taxable profits.
Withholding tax: 1423 (1423x23%=328).
Taxation of dividends-Dividends
Dividends-. Dividends paid to Additionally, employee is required
received from companies located in
resident or nonresident (individual to make a contribution of 7% to the
Iran are exempt from corporation
& companies) are not subject to social cohesion fund on all earning
tax but dividends received from
withholding tax. of employees till cap 1423 Euro.
companies located out of Iran are
Interest- There is no withholding tax Transfer tax – Transfer of
subject to corporation tax
on interest and fees paid made to immovable property are subject to
Capital gains- sale value of
Iranian banking, cooperative funds transfer fees ranging from 5%
securities and listed companies are
and authorized non-bank credit calculated on the special value of
taxable at .05% and 4% for face
the property as estimated by the defense contribution at the rates of both the decedent and the heirs are
Iranian National Tax administration. 15%, 20% ,25%,30% and 35%, Iranian nationals domiciled abroad.
respectively. In the case of foreign nationals as
Anti-avoidance rules: Residence-An individual is resident well as in other cases, any part of
Transfer pricing – The arm's length in Iran if he/she stays in Iran for a the deceased person's properties and
principle requires that transactions period or periods exceeding in the property rights that are situated in
between related parties be carried aggregate 183 days in the tax year. Iran shall entirely be subject to
out at market value and on normal Filing status – Each individual is taxation at the rates provided in the
commercial terms. assessed on a separate basis. Joint Article 20 of the present Act in
Thin capitalization – No assessment for couples is not respect of the heirs of second class.
Controlled foreign companies – No possible. Net wealth/net worth tax – No
Other – Under a general anti – Taxable income- Personal income Social security – Employees are
avoidance provision, any tax is imposed on business profits, required to make social insurance
artificial/fictitious transaction may income from an office or contributions at a rate of 7% of their
be disregarded and the employment, discounts, pensions, salary, up to a maximum amount of
Commissioner of Income Tax may charges or annuities, rents, royalties, EUR 1423. Self-employed
assess tax on the person conceded. remuneration or other profits from individuals contribute at 7%. The
Disclosure requirements – No property and net consideration in contribution is calculated on
Administration and compliance: respect of trade goodwill. Expenses notional income, which varies
Tax year – The tax year is the incurred for the production of according to the trade or profession.
calendar year. The accounts of a income are tax deductible. Unemployment tax: No
company may be closed on a date Capital gains – See under Residence Rules: All the national of
different from 21 March, in which "Corporate taxation". countries with double taxation are
case, taxable profits are apportioned Deductions and allowances – The considered to be resident of Iran for
on a time basis to the relevant tax most important personal deductions tax propose if their reside in Iran
years. are: donations to approved charities; more than 183 days per each year.
Consolidated returns – Taxation on social insurance fund contributions Administration and compliance:
a consolidated basis is not permitted (and similar contributions paid Tax year – Calendar year
and each company is required to abroad); life insurance premiums; Filing and payment – Tax on
submit a separate return. pension plan contributions; and employment income is withheld by
Filing requirements – Tax returns medical fund contributions. the employer under the PAYE
must be filed by 31 Tir (July 22) Rates – The first IRR 50,000,000 is system and remitted to the tax
following the accounting year end. tax free with progressive tax rates authorities. Self-employed
Companies are required to pay imposed up to 35% on remaining individuals pay tax through the
provisional tax accompany tax file amounts. provisional and self-assessment
received. Other taxes on individuals: systems. Tax returns must be filed
Penalties – A fixed penalty of 2.5% Capital duty – No by 31 Tir ( July 22) following the
per month is imposed for late filing. Stamp duty – See under "Corporate tax year for employees; for self-
Rulings- Rulings are available to taxation". employed persons who are not
interpret the law. Capital acquisitions tax – No required to file audited accounts and
Personal taxation: Real property tax – See under self-employed persons whose
Basis – Resident individuals are "Corporate taxation". returns are accompanied by audited
subject to income tax on their Inheritance/estate tax – If as a result accounts.
worldwide income. of a person's death, whether actual Penalties- See under "Corporate
Nonresident individuals are taxed or presumptive, any estate is left taxation".
only on their Iran-source income. from him, it shall be imposed where
Some types of income (rent, salary, the decedent or the heir or both of Value added tax:
interest, inheritance, incidental them or Iranians and reside in Iran, Taxable transactions – VAT is
and ...) are subject to a special the tax shall be imposed, and Where levied on the sale of goods, the
provision of services and the import determination of what the
of goods from outside the Iran. company's tax liability should be.
Rate – The standard rate is 3%
Registration – The registration Statutory Inspectors (Auditors)
threshold for VAT purposes is
EUR 230,800. The law requires the election, by the
Filing and payment – The deadline shareholders, of a statutory
for submission of quarterly VAT inspector and alternate inspector
returns is the 15th after the second once a year at the ordinary general
month following the relevant period. meeting. The election of more than
Payments of VAT must be made by one inspector and alternate inspector
the same date. is optional. In general, the function
Source of tax law: Direct Income of the inspector is to serve as a
Tax Law, Special Defense watchdog over shareholders and
Contribution Law , VAT Law third parties interests and he may be
Tax treaties: Iran has concluded prosecuted criminally for violation
of his duties. Certain categories of
more than 40 tax treaties as
persons such as criminals, the
Germany, France, Armenia, directors and their relatives, and
SouthAfrica, Kazakhstan, persons doing business with the
company are disqualified from
Turkmenistan, Lebanon, Georgia,
serving in this post. Among other
and Ukrain, Belarus things, the inspector is required to
Syria,SriLanka,Russia,China,Switze submit a report of the ordinary
rland,Pakistan,Austria,Uzbekistan,T general meeting each year.
urkey,Tunis,Kyrgyzstan,Spain,Pola Tax authorities: Iranian National
nd,Bulgaria,Venezuela,Bahrain,Jord Tax administration.
on,Malaysia,Croatia,Bosnia&Herze
Free Zone:
govi,Qatar,Indonesia,Tajikistan,Ko Iran has several industrial & trade
wait,Zimbabve,Indonesia,Malsia,Ro free zone that are tax exemption for
mania,Sudan,Oman,Algeria 15 years .

Books of Account Tax sources in Iran:

www.intamedia.ir
www.iacpa.ir
Both the public and private joint www.worldwide-tax.com/iran
stock companies are required to www.vat.ir
maintain in the Persian language the www.dayarayan.net
journal, ledger, inventory and copy
book of merchants. These books
serve as the basis for determining
the company's tax liability and
failure to keep them strictly in
accordance with the legal
requirements may result in the tax
authorities making their own