Tax rates in Iran

Tax Rates

Consumption Taxes

Nature of the Tax: VAT
Tax Rate: 9% (including 6% VAT and 3% municipal excise duties collected under the VAT Act)
Reduced Tax Rate: Several goods and services are exempt, including unprocessed agricultural goods; live birds and pet animals, aquatics, honey bees, and silk worms; fertilizers, poisons, and seeds; flour, all types of bread, meat, sugar, rice, grains, soya, milk, cheese, vegetable oil, and formula as babies food; books, press goods and newspaper, notebooks, and paper for printing, writing, and newspapers; goods gratuitously donated to ministries and government agencies, and non-governmental public institutions; goods imported by passengers as accompanied luggage for personal use, up to the quantities authorized by export & import regulations, beyond which shall be taxable; immovable properties; pharmaceutics, medical treatment services (man – animal), as well as rehabilitation services; services that are subject to salary income tax in accordance with Direct Taxes Act; services of banks and authorized non bank credit institutions; public inter-city and intra-city passenger transportation services; handmade carpets; research and educational services; nourishment of birds and et animals; radars and aerial navigation equipments used at airports, and items exclusively used for defensive and security purposes.
Other Consumption Taxes: Excise duties are levied on tobacco products and petrol. There are special VAT rates for the following goods:
- different kinds of cigarette and tobacco products (12%)
- different kinds of gas and fuels of airplanes (20%).
In addition to the standard rate, other rates are also applied as municipal taxation as follows:
- different kinds of cigarette and tobacco products (10%)
- different kinds of gas and fuels of airplanes (10%)
- kerosene and gas oil (10%) and mazut (5%)
Transfer of domestically-produced and imported automotive vehicles except for those used in road construction, workshops, mines, and agriculture and except for ships and boats, motorcycles and motor tricycles shall be subject to a tax at the rate of 1% (1% of factory sales price of domestically-produced vehicles or 1% of the sum of the CIF value of the goods together with the tax duties and charges, commercial duties and other charges mentioned in the customs documents).

Corporate Taxes

Company Tax: 25%
Tax Rate For Foreign Companies: Foreign companies are treated as local companies for fiscal purposes, but only on their Iran-source income. If a foreign company registers a branch in Iran, such a branch will be taxed in Iran only on the profits derived from the work that has been done inside the country.
Branches and agents of foreign companies and banks in Iran, that, without having the right to make transactions, are engaged in marketing and gathering economic information in Iran for their parent enterprises, and receive remuneration from them against their expenditures, shall not be subject to taxation in respect of such remuneration.
Capital Gains Taxation: Capital gains are not subject to tax in Iran.
Main Allowable Deductions and Tax Credits: In order to be deductible, expenditure must be supported, to a reasonable degree, by documentary evidence and be exclusively connected with the earning of income during the fiscal year in question.
Deductions include amortisation and depreciation, insurance premiums, research and development and training expenditure, transportation expenses, interest fees (except for intercompany non-bank interest fees), fines paid or allocated to banks, taxes, bad debts, personnel cost, rent of machinery and equipment; costs of fuel, electricity, lighting, water and communication; business insurance, royalties, duties and taxes paid; cultural, sports and welfare expenditures paid in respect of workers to the Ministry of Cooperatives, Labor and Social Welfare up to a maximum amount of IRR 10,000 per each worker; expenses incurred in the maintenance and upkeep of the premises; transportation expenses; etc.
Losses may be carried forward indefinitely, but may not be carried back.
Other Corporate Taxes: Other taxes include: Real estate income tax (rates varying between 15% and 35%, after a flat 25% deduction), Transfer tax (5% for real estate and land transfer, 2% for the transfer of goodwill), Payroll tax (withheld by the employer), Stamp duty (0.05% on the issuance of shares), Social security contributions (23% for the employer), social security retention/withholding (5% for payments to contractors).
Other Domestic Resources: Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Iran	Middle East & North Africa	United States	Germany
Number of Payments of Taxes per Year	20.0	20.8	10.6	9.0
Time Taken For Administrative Formalities (Hours)	216.0	204.0	175.0	218.0
Total Share of Taxes (% of Profit)	44.7	32.1	36.6	48.8

Source: Doing Business, Latest available data.

Individual Taxes

Tax Rate

Annual taxable income (employment income)	up to 35%
From IRR 0 to 672 million	0%
From IRR 672 million to 1,800 million	10%
From IRR 1,800 million to 3,000 million	15%
From IRR 3,000 million to 4,200 million	20%
Above IRR 4,200 million	30%
Individual business income	From 15% to 25%
Up to IRR 500,000,000	15%
From IRR 500,000,001 to 1,000,000,000	20%
Above IRR 1,000,000,000	25%

Allowable Deductions and Tax Credits: The main personal deductions are donations to approved charitable institutions; social insurance fund contributions (and similar contributions paid abroad); life insurance premiums; pension plan contributions; and medical fund contributions.
Employees may also deduct from taxable income any payments made for housing loans.
Pensions, retirement allowances and termination of employment payments are exempt from PIT, as well as service-related travel expenditure and allowances, employees’ medical expenses met by employers.
Special Expatriate Tax Regime: There is no special tax regime for expatriates. However, expatriates may be exempt from social security contributions if their country of origin has concluded a social security agreement with Iran.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: List of fiscal conventions signed by Iran
Withholding Taxes: Dividends: 0; Interests: 5%; Royalties: 5%/7.5%.

Sources of Fiscal Information

Tax Authorities: Iranian National Tax Administration (INTA)
Other Domestic Resources: Iranian National Tax Administration - Journal of Tax Research
Invest in Iran - Guide on Iranian Taxation System for Foreign Investors

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