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Corporate Income Tax
| Information presented in this booklet is intended for general use and may change without prior notice. For up-to-date and detailed data, please consult your legal adviser . |
| First edition 1995 |
| Second edition 1997 |
| Published by : |
| IRAN CHAMBER OF COMMERCE, INDUSTRIES AND MINES |
| In February of 1988, the Iranian Parliament passed a new Law of Direct Taxation. In April of 1992, it amended the said law mainly to harmonize it with the requirements of more recent economic policies. Foreigners interested in investing or working in the Islamic Republic of Iran, should be informed of the highlights of this legislation. |
 |
What are the various types of direct taxes? |
| According to the Law of Direct Taxation, there is s direct tax on real property, undeveloped land, inheritance, income earned from agricultural activities, salary, professions, corporations, incidental income, and aggregate income acquired through various sources. However, depending on specific cases, exemptions and discounts are also available. |
 |
Who is liable to pay taxes in Iran? |
| 1.
Companies and all legal entities of Iranian nationality, with respect to
all income earned in Iran or abroad.
2. Every natural person of Iranian nationality residing in Iran, with respect to income earned in Iran or abroad. 3. Every natural person of Iranian nationality residing abroad, with respect to all income earned in Iran. 4. Any non-Iranian natural person or legal entity with respect to income earned in Iran, as well as income gathered through the transfer of a license or right, provision of training and technical assistance, and royalties on movie films. |
|
What type of tax facilities are provided to non-Iranians investing in Iran ? |
| According to Article 3 of the Law Concerning the Attraction and Protection of Foreign Investment, all capital invested in Iran and the profits that accrue therefrom, shall be subject to government protection. All rights, tax exemptions, and facilities accorded to domestic and private productive enterprises, are also available to foreign capital and corporations. |
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What are the most important tax exemptions? |
| Articles 132 of the law of Direct Taxation specify the major tax exemptions are as follows: income earned by productive enterprise and mining units which have obtained an establishment license, or an identification card from the Ministry of industry, Ministry of Mines and Metals or the Ministry of Jihad-e-Sazandegi, shall be exempt from taxation for a period of eight, six, or four years from the commencement date of their operation . If such units are developed in deprived regions of Iran, an equivalent of half of the aforementioned periods of tax exemptions shall be added to their legal period of tax exemption. In addition, 20 percent of taxable income earned from manufacturing, mining which have or will receive an operating license from the said ministries, are exempt from taxation. One hundred percent of income earned through the export of finished industrial goods, and 50 percent of income gained from the export of other items and goods, shall be exempt from taxation. income earned from all agricultural activities, farming, animal husbandry, fisheries and the like are also exempt from taxation. in addition to the above cases, other exemptions and tax breaks have been outlined in the Law of Direct Taxation. Ministries, governmental organizations, municipalities, some public Utility institutions, cultural, religious and scientific foundations are also exempt from taxation. |
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How are corporate taxes calculated? |
| An initial 10 percent of the total taxable income of companies and other legal entities, earned from various sources in Iran or abroad, is deducted as a corporation tax, and the remainder is calculated on the basis of rates set by Article 131 of the Law of Direct Taxation. Non-commercial Iranian legal entities and companies whose shares are offered on the stock exchange market, shall be exempt from the 10 percent corporation tax . The rates set by Article 131 which begin at 12 percent of the annual taxable income and rise to 54 percent, are as follows : |
| Up to Rials.
1,000,000
annual taxable income |
12% | |
| Up TO Rials.
2,500,000
Annual taxable income |
On
sums in excess
of Rials. 1,000,000 |
18% |
| Up TO Rials.
4,000,000
Annual taxable income |
On
sums in excess
of Rials. 2,500,000 |
25% |
| Up TO Rials.
9,000,000
Annual taxable income |
On
sums in excess
of Rials. 4,000,000 |
35% |
| Up
TO Rials.25,000,000
Annual taxable income |
On
sums in excess
of Rials. 9,000,000 |
40% |
| Up TO Rials.
50,000,000
Annual taxable income |
On
sums in excess
of Rials. 25,000,000 |
45% |
| Up TO Rials.
100,000,000
Annual taxable income |
On
sums in excess
of Rials. 50,000,000 |
50% |
| Up TO Rials.
100,000,000
Annual taxable income |
On
sums in excess of
of Rials. 100,000,000 |
52% |
| On sums
in excess of
Rials.300,000,000 |
54% |