Chapter 1: Generalities and definitions
Chapter 2: Exemptions
Chapter 3: Base,rates and manner of computation of tax
Chapter 4: Duties and obligations of the taxpayers
Chapter 5: Value Added Tax Organization, duties and powers
Chapter 6: Other Regulations
Explanatory introductionWith due regard
to the policies and goals referred to in the law of the third
socioeconomic and cultural development plan of the country in connection
with reforming of the tax system and also following the amendments
introduced to the Direct Taxation Act and carried out with the aim of
reducing tax burden on the basis of income and by adjusting tax rates and
increasing base exemptions of the tax source the following bill is
presented with the following goals for legal processing. To increase tax
revenues share in the combination of the government revenues relying on
new sources and on the basis of consumption. To reduce tax burden on
manufacturing and economic producing investments sector by adjusting the
rates of tax revenues. To increase efficiency of the tax system by
reducing expenses made and time spent for tax revenues collection. To
concentrate on activities related to tax collection and eliminate charges
and Semi-Tax revenues. To increase public participation in collecting tax
revenues and to promote self-declaration.
Article 1 – Supply of goods and
provision of services within IRAN as well as Importation and Exportation
of the same shall be liable to the requirements of this act.
Article 2 – In this act, Supply of goods means
transfer of goods in any form of transaction.
Note: Should the goods subject of this act and
purchased, acquired and/or produced by taxpayer be for business purposes
recorded in the taxpayer’s books of account as business assets and/or or
be withdrawn for personal use, such action shall be considered as self
-supply and will be subject to tax.
Article 3 – In this act, provision of services means
rendering services to other persons.
Article 4 – The term “Importation” in this act, means
importation of goods or services from abroad and from free trade
–Industrial Zones.
Article 5 – The term “Exportation” in this act, means
export of goods or services abroad and to free trade or industrial Zones.
Article 6 – The word “Tax” in this act refers to Value
Added Tax.
Article 7 – For the purpose of this act value added,
means the difference between value of the goods and services supplied
during a certain period of time and that of the goods and services used or
acquired in that same period.
Article 8 – Any person engaged in supply, importation
and Exportation of goods and services shall be considered as taxpayers and
shall be subject to the provisions of this act.
Article 9 – In case of exchange of goods and services
subject to this act, supply of goods or provision of services by any of
the parties of the transaction, shall be liable to this tax separately.
Article 10 – Every solar year is divided into six
2-month tax periods, beginning from the first day of “Farvardin” of each
year and ending at the end of the month “Ordibehesht”, “Tir” “Shahrivar”
“Aban”, “Dey” and “Esfand” of each relevant year respectively.
In case the activity of the taxpayer begins or ends within the course
of a tax period, the duration of the taxpayer’s activity within the
interval shall be considered as a tax period. The Council of Ministers is
authorized to change duration of tax periods for any groups of taxpayers
which it deems appropriate upon proposal of the State Tax Affairs
Organization.
Article 11 – The tax shall be charged at the following
times:
A- In case of supply of goods:
1. Date of invoice, date of delivery of goods or
date of transfer of ownership whichever earlier, as the case
may be.
2. As for the cases mentioned in the Note to Article (2)
of this act, the date of entering the asset in the books of account, or
commencement of making use, whichever earlier, or the date of withdrawal
of the same as the case may be.
3. in case of transactions subject to article (9) of this act,
Date of exchange.
B- In case of provision of services:
1. Date of invoice, or the time the service is rendered,
whichever earlier, as the case may be.
2. in case of transactions subject to article (9) of this
act, Date of exchange.
C- In case of importation and exportation, date of export or date
of customs clearance for goods and date of payment of the consideration
for services.
Note: In case of employing cashier machines, the
chargeability date of the tax shall be the date on which the transaction
is entered into the machine.
Chapter 2
Article 12 – Supply and importation of the following goods and
services are exempt from taxation according to case:
1- Unprocessed Agricultural products.
2- Live stock and live birds, aquatics, honeybees and silkworm.
3- Fertilizer, pesticide, seeds.
4- Flour, all varieties of bread, meat, cube sugar,
sugar, rice, grains, soy, milk, cheese, vegetable oil and formula as
babies food.
5- Paper for printing, writing and newspapers.
6- Goods donated free of charge to the ministries and
government agencies, non-government public institutions and public utility
institution.Distinguishing ether
the goods can be considered as dedicated or not shall rest on the Council
Of Ministers.
7- Goods imported by passengers into the country as
for personal use, up to the amount of exemption provisioned under export
and import regulations. Any amount in excess shall be liable to tax under
the provisions of this act.
8- Immoveable properties
9- Medicine, Medical services (whether for human or
animal) as well as services rendered by the State Welfare Organization in
accordance with the provisions to be specified in the By-Law to be
approved by the Council of Ministers upon proposals from the Ministries of
Health, Treatment and Medical Education, and Ministry of Economic Affairs
and Finance.
10- Services subject to wage and salary income tax as
specified in the Direct Taxation Act.
11- Services rendered by banks and authorized
non-bank credit and financial institutions.
12- Inter-city and intra-city public passenger
transportation services, inter-city and intra-city train system services.
13- Press goods and books
14- Research and training services according to the
provisions to be specified in a By-Law to be approved by the Council of
Ministers upon joint proposal from the Ministry of Science, Research and
Technology and the Ministry of Economic Affairs and Finance.
Article 13 – Export of goods and
services abroad or to the free trade-industrial zones shall not be liable
to the tax subject of this act and the taxes paid will be refunded upon
presenting proving documents.
Note: Goods accompanying foreign
passengers at the time of departure from the country may be reclaimed up
to the limit specified in the relevant laws.
Executive guidelines of this note shall be compiled
by the State Tax Affairs Organization and confirmed by the Ministers of
Economic Affairs and Finance and Commerce.
Chapter 3
Article 14 –
The base of computation of the tax will be the price of goods or services as specified in the invoice. In case no invoice is
available or if no invoice is presented and/or if according to provable documents
it is found that the value specified in the invoice does
not reflect true value, then the price of goods and services prevalent at
the date of chargeability of the tax shall be taken as the basis for
tax computation.
Note: The followings are not included in
the basis of tax computation:
A- Discounts.
B- The tax amount already paid by the supplier of goods
and services, in accordance with this law.
C- Other indirect taxes and duties applied to the goods
and services when they were supplied.
Article 15 – The base of computation of
tax on importation of goods is the CIF value of the goods plus customs
duties and charges, commercial benefit and other levies mentioned in the
customs documents.
Article 16 – The Value Added Tax rate is
seven percent.
Article 17– The taxes paid by the
taxpayers at the time of receiving goods and services for their own
businesses use and evidenced by invoices issued in accordance with this
act, shall be deductible from the taxes collected by them.
Note 1: In case of payment excess of the
tax due in the tax period by the taxpayers subject to the provisions of
this article, the excess amount shall be carried forward to the tax
account of the taxpayer in the next tax periods or may be refunded in the
following tax period should the relevant taxpayers demand so.
Note 2: In case the taxpayers supply
exempt goods or services and/or are not subject to tax in accordance with
the provisions of this act, the taxes paid for such goods and services
shall not be refunded.
Note 3: In case of suppliers engaged in
supplying both taxable and non-taxable goods and services, the taxes paid
in connection with the taxable goods or services shall be carried into the
tax account of the tax payer.
Note 4: That portion of the Value Added
Tax paid by the taxpayers which is not refundable or may not be offset
shall be considered as acceptable costs subject of Direct Taxation Act.
Note 5: The excess amount collected from
taxpayers in accordance with this act if not refunded within three months
from the date requested by the taxpayer shall be entitled to compensation
at the rate of one unit above the highest interest paid on the credits
granted by banks to the service sector in proportion to the refundable
amount. The said rate shall be on annual basis and the pertaining
compensation shall be calculated and payable in-lieu of the delayed
period.
Chapter 4
Article 18 – Suppliers of goods
or services liable to the tax levied by this act are required to register themselves in accordance with arrangements to be determined by the
State Tax Affairs Organization of the Ministry of Economic Affairs and Finance.
Article 19 – When supplying goods
or services subject to taxation under this act Taxpayers are required to
issue an invoice containing particulars of the parties to the transaction
and specification of transacted goods and services according to the
arrangements to be determined and announced by the State Tax Affairs
Organization, specifying the tax in separate column and collecting the
same. Note: Customs officials are required to collect the tax subject of this act and state the same
in the related customs licenses and/or relevant forms as the case maybe.
Article 20 – Taxpayers are required to calculate the tax stipulated in
this act and collect it from the other party to the transaction.
Article 21 – Taxpayers are
required to submit the tax return of each tax period according to the form
and arrangements to be determined by the State Tax Affairs Organization
within 15 days after the end of the tax period and pay the related tax
amount after deducting the taxes paid by them on the basis of the provisions of this act,
to the account of the State Tax Affairs Organization in due time.
Note 1: Should the duration of a business activity be less than a tax period, the obligations referred
to in this article should apply to such shorter period as well.
Note 2: The real and legal persons having several business places shall have to submit separate tax
returns and pay the tax for each place, business or activity separately.
Note 3: In case of workshops,
manufacturing, services, or commercial units whose type of activity
requires establishing offices or stores in one or more other places,
submitting a single tax return by the taxpayer, in accordance with guidelines to be approved by the State
Tax Affairs Organization, shall be subject to approval of the said organization.
Note 4: In case of those
taxpayers subject to this act who do not have a fixed business place;
their place of dwelling shall be regarded as the place of their business for
the purpose of filing the tax return and payment of the tax.
Article 22 – Persons and
businesses which are exempted from the obligations stipulated in this act
on the basis of the type and volume their activity, shall be determined
and announced upon proposal of the State Tax Affairs Organization and approval of the Minister
of Economic Affairs and Finance and confirmation of the Council of Ministers.
Article 23 – If the taxpayers
fail to comply with the duties stipulated in this act and/or violate the
provisions of the this act, they shall be subject to a fine up to twice
the amount of the applicable tax at maximum, in addition to payment of
pertaining tax in accordance with a by-law to be approved by the council of ministers upon proposal of the State Tax
affairs Organization and confirmation of The Minister of Economic Affairs and Finance.
Article 24 – Any delay in payment
of the taxes subject of this act during specified intervals shall result
in application of extra tax, amounting to one unit more than the highest
interest rate of the credits granted by banks to the services sector and
in proportion to pertaining tax. The said rate shall be on annual basis and the extra
tax applied shall be computable and collectable in proportion to delay period.
Chapter 5
Article 25 – The State Tax Affairs Organization
is authorized to provide the required manpower and equipment from approval
date of this act within the organizational framework to be confirmed by
the Management and Planning Organization.
Article 26 – The duties and powers and position titles
of the relevant officials, their qualifications for incumbency and also
arrangements for tax examination shall be on the basis of a by-law to be
proposed by the State Tax Affairs Organization and approved by the
Minister of Economic Affairs and Finance.
Article 27 –
For the purpose
of investigation and supervision on due enforcement of this act and also
for examination of tax return or determination of the amount of
taxpayers’ transactions, the relevant officials may refer to taxpayers and buyers
and examine their books of account and records.
The taxpayers and buyers are required to present the
requested books of account and documents. In case the requested books of
account and documents are not made available the applicable tax shall be
determined ex-officially and exacted.
Article 28 – In case where the notice of tax claim or
the notice of refund of excess tax is served on the taxpayers he may
apply, if being unsatisfied, to the respective tax office within twenty
days from the date of notification for settling disputes. If the dispute
is settled, the case will be dismissed. In case the taxpayer does not
submit written objection within the said time limit, the tax claim notice
or the excess tax refund notice shall become final, as the case maybe.
Article 29 – If the taxpayer submits his written
objection within the time limit specified in Article (28) of this act to
the relevant tax office, the file of the case shall be referred within ten
days from submission, to the board of settlement of tax disputes envisaged
under the Direct Taxation Act.
Article 30 – The board of settlement of tax
disputes subject of the Direct Taxation Act shall review the subject of
dispute according to the respective regulations and issue appropriate
verdict. This verdict shall be final and enforceable and will not be
appeal able before other tax authorities.
Article 31 – Investigation of offences of the
officials responsible for execution of this act as well as taxpayers shall
be subject to the provisions of the Direct Taxation Act, except for cases
mentioned in this act.
Chapter 6
Article 32 - The taxpayers
subject to this act are bound to use books of accounts, invoices and other relevant forms, cash
register machines and/or other means and methods of keeping accounts which will be
determined by the State Tax Affairs Organization. The said documents should
be kept for ten years after the relevant fiscal year by the
taxpayers and presented to the tax officials should they refer.
Article 33 – In cases where certain evidence or
documents relating to the supply of goods and services by the taxpayers be
at the disposal of third parties, the said persons are bound
to produce the relevant evidence and documents and provide any necessary information
when asked in writing by the officials enforcing this act.
Article 34 – In case losses are
sustained by government as a result of third parties’ refusal to produce
the evidence and documents requested by the officials assigned to enforcing this act, the refuser shall
be liable for indemnification of the government losses. The forum for verifying such
refusal and determining the losses sustained by government shall be the
competent judicial authorities who will examine the case out of turn when
requested and followed up by the State Tax Affairs Organization.
Article 35 – The State Tax
Affairs Organization is authorized to delegate tax collection and
remittance of certain taxpayers subject of this act to third parties who
will be responsible or act as intermediary for receipt and payment of
funds among taxpayers and others as and when considered appropriate. In such cases upon announcement by the tax authorities
the said persons shall be bound to deduct and/or collect the applicable tax
at the time of payment or allocation and remit the same
to the relevant tax account within ten days from the date of
payment or allocation and submit the receipt to the taxpayer.
Article 36 - The officials in
charge of enforcement of this act must consider the
information they obtain in the course of reviewing tax returns and/or examination of
the tax affairs of the taxpayers as confidential and refrain from
disclosing this same except for tax assessment purposes. In case of disclosure,
they shall be punished in accordance with the relevant regulations.
Article 37 – Equivalent of
half-a-percent of the amounts which will be collected as tax and penalties
subject of this act will be considered as revenues allocated to the said
organization, subject of article (14) of the Public Accounting Act of 1366. Allocated budget out of the said
revenues which will be included annually in the State Budget Law shall be
utilized to encourage the personnel and other persons who exert effective
endeavor in collection of the tax. The funds paid on the strength
of this article shall be exempt from all contradicting regulations.
Article 38 - The State Tax
Affairs Organization is bound to prepare and draw-up necessary plans for
the purpose of development and equipment, education and training of the
tax personnel and promotion of tax culture, by media and other suitable
arrangements throughout the country within a maximum period of five years. The State
Management and Planning Organization, is bound to annually allocate necessary budget
for execution of this plan in the draft bill of the overall
budget of the country, upon proposal of the said org.
Article 39 -
Managing director and other responsible directors of juridical persons
shall be jointly or severally responsible for the payment of the
finalized tax liability of the juridical persons, subject of this act where
such liability is related to the terms of their office.
Article 40 -
The regulations of
the Direct Taxation Act concerning “tax collection” and “Service of process” shall
apply to the taxes provided in this act as well.
Article 41 - As from the date
this act becomes effective, All contradicting laws, whether general and
special, shall become null and void and also imposition and collection of any
other indirect taxes on producers and importers of goods and providers of services
will be disallowed and all the laws and regulations in respect
of collection of any kind of indirect taxes on production and importation
of goods and provision of services shall also become void.
The followings
are excluded from applicability of the rules of this article:
-Tax on imported vehicles
-Tax on transfer of vehicles and water crafts.
-Customs duties and commercial benefit tax
Article 42 –
This act shall become enforceable as
from the first day of FARVARDIN of the year 1384.
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