Companies and all legal entities of Iranian nationality are subject to income tax on income earned whether in Iran or through activities abroad. Foreign companies and individuals are subject to taxation based on income earned through work performed in Iran. Dual taxation treaties were signed with Germany in 1968 and France in 1973 and are still in force. Additionally, under reciprocity agreements entered into with certain countries, airlines and shipping companies of those nations are

exempt from taxation on income earned in Iran through passenger and cargo services.
Tax exemptions are specifically foreseen in Articles 132 and 146 in the Law of Direct Taxation. Exemptions are applicable to income earned from manufacturing and mining activities for periods of up to four to eight years starting from the date of commencement of operations and 20% of the reported profit of all manufacturing, mining, assembly plant and related engineering work is exempt from income tax. It should also be of note that 100% of income earned via the export of finished industrial goods and 50% of income gained from the export of other items or goods are also exempt from taxation.

In light of Iran's industrialization and development policies, technical assistance contracts are subject to lower than usual tax rates provided that at least part of the work is carried out in Iran and the contract is with a governmental (or affiliated) organization.