Tax & Customs Issues

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79.What is the rate of income tax for juridical persons in Iran?
The rate of income tax for juridical persons in Iran is 25% of the taxable income (Article 105, Iranian Tax Code).
80.Is an equal rate of tax applicable to all types of company including Iranian as well as foreign companies?
The rate of tax for all types of company, whether Iranian or foreign (branches and representative offices), is 25% that is equally applied (Article 105, Iranian Tax Code).
81.Are branches and representative offices of foreign companies which are engaged only in marketing and information collection for their parent companies abroad, subject to payment of income tax too?
No, branches and representative offices of foreign companies and banks which are engaged in gathering information or marketing in Iran for their parent companies, without any transaction right, and receive remuneration from them against their expenditures, shall not be subject to taxation in respect of such remuneration ( Note 2, Article 107, Iranian Tax Code).
82.How is the income tax of foreign airlines and shipping companies calculated in Iran?
The tax of foreign airlines and shipping companies for passenger freight cost and the like earned in Iran, is a fixed rate of 5% of such earnings whether collected in Iran, at the destination, or on the way.
83.Shall the income derived from transfer of technology agreements such as technical know-how, engineering and technical services and also payments of license fee and royalty be subject to taxation?
In case of granting of licenses and other rights in such agreements, which is considered as the income of foreign juridical persons, taxable income consist of 20% to 40% of all payments received by them during a tax year and shall be taxed at a rate of 25% (Note 2, Article 105; Para“b”, Article 107, Iranian Tax Code).
84.How the contracting business agreements are taxed?
In case of contracting businesses of foreign entities in Iran with regard to all types of work in fields of construction, installations, and technical installation including procurement and setting up of the same or transportation, preparation of design for buildings and installation, topography, supervision and technical calculations, provision of training and technical assistance, transfer of technology and other services, the taxable income will be 12% of total annual receipts. (Para“a”, Article 107, Iranian Tax Code). In the event the relevant employer of the contract is a ministry, a government institution, a state company or a municipality, then that part of the contract price which is used for purchase of supplies and equipments from domestic or foreign sources shall be exempt from taxation, provided that the amounts relevant to those supplies and equipments are included, apart from other items, in the contract or in its further amendments or supplements. (Note 2, Article 107, Iranian Tax Code). However, in accordance with Note 5 of Article 107 of Iranian Tax Code, the taxable income of the activities subject matter of Para“a” of Article 107 thereof, the contracts which will be concluded from the beginning of the year 2003 onwards, shall be audited according to the provisions of Article 106, by way examination of statutory books.
85.How to compute the taxable income in Build, Operate and Transfer (B.O.T) projects, and what is the rate?
The taxable income of foreign investors in Build, Operate and Transfer (B.O.T) contracts in Iran, shall be calculated at a fixed rate of 25% after deduction of acceptable expenditures, by way of examination of the statutory books (Article 105 and 106, Iranian Tax Code).
86.What is the manner of computation of salary income tax of foreignemployees?
The tax rate of salary income of employees whether Iranian or foreigner, after deduction of annual exemptions provided in Article 84of Iranian Tax Code and up to IRR42,000,000 of the annual salary income, shall be subject to a rate of 10%. The rest shall be subject to a rate ranging from 20% to 35%, in accordance with Article 131of the said Code.
87.What is the rate of tax applicable to transfer of shares of companies listed in the Stock Exchange?
Each transfer of companies’ shares and priority right of shares, shall be taxed at a flat rate of 0.5% of the sale value of such shares and priority rights of shares (Note 1, Article 143, Iranian Tax Code).
88.What is the rate of tax applicable to transfer of shares of other companies?
Each transfer of stocks, partnership shares, priority right of stocks and partnership shares shall be taxed at a flat rate of 4% of face value of the shares and/or partnership shares (Note 2, Article 143, Iranian Tax Code).
89.What customs duties are there?
The aggregate of custom tax and duties, order registration fee and other levies on imported goods is called as customs duties which is charged at a rate of 4% of the customs value of the goods. This sum plus the commercial benefit to be determined by the Council of Ministers are referred to as import duties.
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