Over 40 percent of Iran economy excluded from tax

Baku, Azerbaijan, Dec. 17

By Farhad Daneshvar - Trend:

Some 43 percent of Iranian people and organizations who produce goods and services are excluded from paying taxes, Ali Tayyeb-Nia, Minister of Economic Affairs and Finance said.

The taxes system in Iran does not have a proper role in providing the government with funds due to lack of an economic and fiscal database as well as large numbers of companies and people who are excluded from paying tax, he addressed 9th Iranian Tax and Fiscal Policies Conference in Tehran through a message on 16 December.

Pointing to the sharp decline in oil prices he said that the revenues obtained from tax payers have drawn the government's attention, Mehr news agency reported.

He criticized the inefficient tax system in Iran and called for improving the tax system in the country through promoting tax culture.

Saying that investment is an essential tool to grow the country's economy he added that for attracting investment there should be a secure environment.

Earlier in an interview with Iranian economic weekly of Tejarat-e-Farda (literally meaning Tomorrow's Business), Ali Askari, the former head of the Iran's tax organization, said that 40 percent of those organizations and Iranians who are engaged in economic activities in the country do not pay tax and underground economic activities count for 20 percent of the country's economy.

Ali Askari criticized the high number of exclusions from tax and said the government should review its tax policies.

Saying that traders produce 33 percent of the gross domestic product (GDP) in Iran, he added that the traders only paid 5 percent of the tax revenues in the country over the last year.
Some media outlets reported that Askari resigned about 10 days ago claiming that his resignation became under "pressures".

However he was later appointed as an advisor to Ali Tayyeb-Nia, Minister of Economic Affairs and Finance.

The Iranian government has proposed the country's next-year national budget plan by percentage rather than by predicted oil revenue.

This comes for the fact that oil prices are vacillating and a fixed price could not be given to oil for the next year.

The government has predicted that its revenue from tax will reach about $ 26 billion in the coming Iranian year to start March 2016.

According to the World Bank Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, with an estimated Gross Domestic Product (GDP) in 2014 of $ 406.3 billion.

Iran's economy is characterized by a large hydrocarbon sector, small scale agriculture and services sectors, and a noticeable state presence in manufacturing and financial services. Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves. Economic activity and government revenues still depend to a large extent on oil revenues and therefore remain volatile.

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