A Review of the Iranian Tax System 
1. Tax Bases and Rates
The Iranian tax system is divided into two general categories of direct and indirect taxes. The share of direct taxes from the total tax revenues is almost 68% currently. There are two major types of direct taxes including income taxes and property taxes. Each category of direct taxes, in turn, is divided into sub-parts. Indirect taxes include taxes on imports and Value Added Tax (VAT). Taxes on imports are currently collected by the Iranian Customs and are not within the jurisdiction of INTA. Table 1 briefly shows various types of taxes in the Iranian taxation system

 Table (1):  The Iranian Tax System

Tax Category

Tax

Type 

Tax

Base

Act/

Chapter/Article

Taxable

Income

Taxable Persons

Tax

Rates

Direct Taxes

Income Taxes

Real Estate Income Tax

DTA - C/I/52-58

Income of persons derived from transfer of rights in immovable properties situated in Iran, less the exemptions: total rent, less a deduction of 25% for expenses, depreciations, and commitments of the owner in regard to the property.

Owners who have rented their immoveable properties to others

15%-35%

Employment Income Tax

DTA -C/III/82-92

Salaries, wages or any other remuneration received by individuals in respect of their employment services. Payments for works conducted out of Iran, shall be subject to the tax, provided that the payer is an Iranian resident.  

Individuals

10%  for public sector employees and the others 10-35%

Individual Business Income Tax

DTA -C/IV/ 93-104

Unincorporated business activities (aggregate sale of goods and services) less the exemptions provided in the DTA

Individuals

15-35%

Corporate Income Tax

DTA -C/V/105-118

Aggregate profits of companies, and the profits from the profit-making activities of other legal persons, derived from sources in Iran or abroad, less the losses from nonexempt sources and minus the provisioned exemptions

Legal Persons

25%

Tax on Incidental Income

DTA -C/VI/11119-131

Income earned ex gratia or through favoritism or as an award.

Real or legal person

15-35%

Property Taxes

Tax on Transfer of Real Properties

DTA -C/I/59-80

Final transfer of real estates & goodwill shall be subject to taxation at the date of transfer.   

Real or legal person

5% & 2%

Tax on Transfer of Shares

DTA -D/I/143

Nominal value of transfer of shares

Joint Stock Companies and other Companies

0.5% & 4%

Inheritance Tax

DTA -B/IV/17-43

Any estate left from the deceased individual. 

Real person

5-65%

Stamp Duties

DTA -B/5/44-51

Each sheet of check printed by banks (Rls. 200), bill of exchange, promissory notes (0.3%), and other documents and negotiable papers with specified amounts.  

 

As provisioned in Articles 44-51

Indirect Taxes

VAT

Value Added

VATA

Value added resulting from the sale of all goods and services and their imports, except 17 items listed in Article 12 of the VAT Act (VATA) as the exempted ones

Real and Legal Persons

6% currently, to be annually increased for 1% up to 8% by the end of the 5thDevelopment Plan

 

   

Taxes on Imports

Currently collectible by the Iranian Customs Organization.