Iran's tax reform may affect individual revenues
TEHRAN, Iran, Dec.20
The draft of reform bill for some tax regulations has been prepared to be implemented next Iranian year (starts March 21, 2020); it will affect direct taxes according and lead to slight changes in some regulations, said an economist.
"Politicians have changed the government budget after the fall of oil income in current Iranian year [began March 21,2019]," Hossein Soltanabadi told Trend. "The country's tax system is in need of reform and no economist denies the necessity of changing hidden subside system."
"The important goal of the reform is cutting dependency on oil revenues. Reduction of oil revenues alongside increase in using national development fund and foreign saving account means the past oil revenues are being used instead of current oil incomes. However, publishing government's debt bonds without specific plan for paying the debts shows there is a hope for possible oil revenues in the future and obtaining loan," the economist said.
"Currently, reform of tax system has been put on the agenda with the same purpose to reduce dependency on oil revenues; unofficial sources indicate that there shall be will surplus income of $7.1 billion based on the draft," Soltanabadi indicated.
"Many experts do not recommend the increase of tax revenues during current economic recession in Iran, while the government follows its approach; therefore, reduction of the recession by use of the tax reform should be an important change," he added.
While the tax on individuals revenues has decreased from 25 percent to 18 percent comparing to private sector's share, it has increased from 25 percent to 30 percent if compared with the government share, the economist noted.
"It can be claimed that the total tax from individuals revenues has not changed dramatically, but by expanding tax revenue declaration, the total tax revenue will gradually increase; therefore, it is suggested that the tax rate on individuals should be reduced due to Iran's economic recession to minimum or even zero," the expert said.
It should be noted that based on the draft, only changing variable in budget bill is basic tax exemption.
"The government should avoid excessive taxes, for example, not removing tax exemption for individuals' revenues is equal to investment taxes," Soltanabadi. "However, these changes have not been stated in a transparent form in the tax reform bill, so implementing such a big change would be difficult."