Imports of essential household items are subject to VAT

Iran's customs announced in a statement that imports of essential household items, from wheat and rice to baby formula and oil, will be subject to value-added tax.

According to the statement, which was published on Sunday, January 25, imports of products such as chicken eggs, various types of meat, flour and bread, milk, cheese, yogurt, rice and legumes, soybeans and various edible oils, as well as powdered milk for children will be subject to a 9 percent value-added tax starting from January 3.

The Iranian government has also canceled the allocation of 4,200 tomans for the import of basic goods for next year, and it is not yet clear whether preferential currency will be allocated for the import of medicine.

The elimination of preferential currency for basic goods and the imposition of a value-added tax are expected to sharply increase the prices of essential items for households.

Official statistics from the Islamic Republic show that food inflation in the country is around 60 percent; however, domestic and field reports indicate that the growth in food prices is much higher than official statistics.

In next year's budget bill, the Iranian government has increased its tax revenues by 70 percent to compensate for the budget deficit, which is even higher than the inflation rate.

In recent weeks, purchases of gold, jewelry, and foreign currencies have been subject to a 9 percent value-added tax, and now major imported essential goods have also been added to this list.

Among the essential imported goods for households that are subject to value-added tax, rice, wheat, soybeans, oil, and legumes happen to be among the items that are at the top of the country's imports, and Iran's domestic market is in dire need of importing these goods.

Customs statistics show that eight of the top 10 items imported into the country, worth about $6.2 billion, in 2020 were agricultural products such as wheat, corn, soybean meal, and the like, and 71 percent of the preferential currency allocated to imports of basic goods in the same year was related to agricultural goods.

Last year, $1.4 billion in preferential currency was also allocated to the import of medicine.

While some Iranian officials have announced the continuation of preferential currency allocation, the Director General of Drugs and Controlled Substances under the Food and Drug Administration said on Sunday that preferential currency "causes corruption," adding: "Our proposal to prevent drug prices from increasing is insurance coverage or issuing health cards."

On Sunday, MP Ali Khazrian also announced a six-fold increase in the price of some painkillers and painkillers, such as naproxen, and said: "The 4,200-toman currency has not yet been eliminated, and these damages are being seen in the field of health and treatment."

In a public session on Sunday, January 25, the Islamic Consultative Assembly said that changing some numbers in the budget bill is very impactful and worth considering for the weaker sections of society.

ISNA news agency reported on December 1 that the price of naproxen had risen from 6,500 tomans to 28,000 tomans, and some social media users say that its price has now reached 40,000 tomans.

Source: Radio Farda