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What is the situation of foreign companies operating in Iran, concerning taxes?

According to Article 105 of the Law of Direct Taxation, foreign legal entities must pay taxes on all taxable income earned through investments in Iran or from direct or indirect (through agents, branch offices, etc.) activities, assignment of their royalties or other rights, or by providing training and technical assistance in Iran, at the rates stated in Article 131. Nevertheless, direct taxes on income earned by foreign airlines and shipping companies through transporting passengers and cargo from Iran, is a flat rate of five percent on all sums received from these activities in Iran, en route, or at the final destination. Where the tax applying to the income of the Iranian exceeds five percent of the fare collected, the Ministry of Economic Affairs and Finance shall be required, upon notification by the Iranian entity concerned, to increase the tax rate applying to the income of the airline and shipping companies of the said country, to the amount of tax collected in that country .

Are there any other flat rate taxes ?

Yes. Taxable income of foreign contractors in Iran, active in areas such as construction, technical installations, transportation, designing plans for buildings and installations, topographical surveying , drawing, supervision and technical calculations, is a flat rate of 12 percent of their annual receipts in all instances. With respect to contracting work performed by foreigners, when the employers are ministries, governmental organizations and companies or municipalities, the portion of the contract price utilized on the purchase of supplies and equipment received from abroad, is exempt from the payment of income tax. The taxable income of foreign legal entities earned by the assignment of their royalties and other rights, provision of technical training and ceding of movie films ( earned as price, screening rights, or otherwise), depending on the case, shall be from 20 to 90 percent of the total sum acquired by the the entity within one fiscal year. The rate set for each case is determined according to the regulations approved by the Council of Ministers. When training and technical assistance is provided to governmental organizations, the scale of payment of the taxable income of the entity concerned may be set at lower than 20 percent. Foreign insurance companies which earn their profit through reinsurance may be subject to a tax at the rate of two percent of the premium collected and the interest accrued from their deposits in Iran. In cases where Iranian insurance companies acting in the country of citizenship of the foreign reinsurance company, are exempt from payment of taxes on reinsurance activities, the foreign establishments shall also be exempted from payment of taxes to the Iranian government

What type of tax incentives are there for invest   and activities in the Free Trade-Industrial Zones in Iran?

According to Article 13 of the Law Concerning the Manner of Administering the Free Trade - 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 a period of 15 years, from the date of operation as stated in their license.

Are there safeguards against being retaxed in the law of Direct Taxation?

In order to prevent double taxation, the government of Iran has signed agreements with Germany and France. Also under the rules of reciprocity, airlines and shipping companies of certain countries are exempt from taxation on income earned in Iran, by carrying passengers and cargo.

Are the activities of agents of foreign companies in Iran also taxable?

Branches and agencies of foreign companies which have been registered according to the relevant regulations in iran, and by virtue of their articles of association are not authorized to engage in profitable activities but can do marketing and collect economic Information, are not liable to any taxation on the sums received from the mother company as a revolving fund. However, if it is proven that the said branches and agencies are engaged in profitable activities in iran and are acquiring an income therefrom, the sums earned shall be subject to taxation according to the respective regulations.

What regulations are taxes on salaries of foreigners working in Iran subject to?

In principle, issuance of a permit to leave Iran, or extension of a residence permit or work permit for expatriates, except for those who are exempt from the payment of taxes, shall be subject to the submission of a tax clearance certificate on salary received. the taxable Income earned as salary, consists of the salary ( wages, or the basic salary) and fringe benefits related to the job, be it temporary or permanent after deducting exemptions determined by the law. The value of non-pecuniary benefits such as housing, private auto mobiles and the like, put at the disposal of salaried individuals, are calculated and added to the salary paid to them.