Iran’s Billionaires Either Don’t Pay Taxes or Pay Very Little

The head of the Iranian Tax Administration says that according to investigations, half of individuals with billion-toman incomes pay no taxes at all. The administration’s inspection director estimates annual tax evasion at up to 50 thousand billion tomans.

The discussion about tax evasion and tax avoidance in Iran has a long history, but different figures are announced regarding its extent. Now the head of the Iranian Tax Administration says that half of Iran’s billionaires pay no taxes at all.

According to IRNA news agency, Omidalai Parsa said on Saturday evening, the fourth of Aban, at a meeting of the Khorasan Razavi Resistance Economy Command Headquarters in Mashhad that the taxes received are very low and not more than approximately eight percent of total revenues because “there are many tax exemptions, even more evasions, and smaller tax bases.”

The head of the Tax Administration said at this meeting: “The banking list of financial transactions of around 300,000 people with incomes above one billion tomans is in the possession of this organization. Based on investigations conducted, half of them were not taxpayers, and the other half who were taxpayers paid less than they should have.”

Tax Evasion, Tax Exemptions

Amidalai Parsa did not provide further explanation about which sectors are covered by tax exemptions and what their extent is. This is a topic that has been widely discussed in recent years, but its exact dimensions are unclear.

In Iran, many state institutions and bodies under the command of the Supreme Leader of the Islamic Republic enjoy tax exemptions or are at least not subject to “direct tax” payments.

The deputy for direct taxes at the tax administration published a list in Aban last year of ten institutions including the Martyrs Foundation, the Relief Committee, and the Foundation for the Oppressed, which have tax exemptions. He also said that the economic activities of these institutions and foundations are not exempt from tax payments.

Parsa, mentioning that 141 thousand billion tomans in tax revenue is projected in the current year’s budget, said: “The government does not want the disciplined, transparent, and well-managed private sector to face any double tax pressure to finance its expenses.”

Hadi Khani, director general of the inspection office of the Tax Administration, announced in Mordad of this year the identification of more than 24 thousand billion tomans of tax evasion through monitoring bank transactions over the past three years.

40 to 50 Thousand Billion Tomans of Tax Evasion

He also announced the identification of approximately 422 million bank transactions of “individuals suspected of tax evasion nationwide” and said these cases are under investigation by tax units.

This responsible official at the Tax Administration said last month that based on estimates made, the amount of annual tax evasion in Iran is between 40 to 50 thousand billion tomans.

Apparently, these figures relate to identified tax evasions. Hadi Khani had said on the eighth of Mehr in a gathering of journalists: “I still don’t have numbers for tax evasion by provinces because estimating its amount requires access to detailed data of all economic activities.”

Since a large portion of economic activities in Iran are non-transparent and there is no precise oversight of them, it is neither simple to determine the actual amount of tax evasion nor to effectively combat it.

For this reason, even senior government officials announce different figures on this matter. While Hadi Khani announced annual tax evasion of up to 50 thousand billion tomans, Farhad Dejpasand, the Minister of Economy and Finance, estimates this amount between 25 to at most 40 thousand billion tomans.

Some experts have estimated the amount of tax evasion at up to 80 thousand billion tomans per year. If this estimate is correct, it means that half of Iran’s economy avoids paying taxes.

Wage Earners, Real Taxpayers?

It appears that the only sector that has little opportunity for tax evasion is the “wage and salary group,” which primarily includes salary earners of the government and its affiliated agencies.

In the current year’s budget, revenues from taxes and fees are projected at 238 thousand billion tomans, of which approximately 153 billion tomans are taxes and the rest are fees. From this amount, the wage and salary group’s share is 12 thousand billion tomans, and the tax revenue from the “self-employed group” is 9 thousand billion tomans.

The self-employed group includes high-income professions such as doctors, lawyers, goldsmiths, restaurant owners, and wholesalers. The Fars News Agency reported in Shahrivar of this year, citing estimates from Iran’s Statistical Center, that this group’s share of total gross national product is 36 percent, yet they only provide six percent of the government’s tax revenues.

According to this report, if the amount of tax from the self-employed group is calculated based on its share of the economy, the “actual amount of tax evasion” by this group in a year reaches approximately 70 thousand billion tomans.

Source: DW