90.What is meant by tax exemption, and how they are realized?
Tax exemption means exemption from payment of tax on income derived from industrial, mining and producing activities. Companies in Iran are required to withhold the tax on dividend, which is considered as natural entities’ tax, and pay it to the relevant tax office (Article 132, Iranian Tax Code).
91.What are the tax exemptions, and in what manner they can be applied?
· Tax exemption in industry, mining and producing sectors:
1. 80% of the income derived from producing and mining activities of cooperative and private sectors are tax exempted for a term of 4 years as from the date of exploitation or extraction (operation) (Article 132, Iranian Tax Code).
2. Any part of the declared profit of private and cooperative companies that is used in the same year for development, reconstruction, renovation or completion of existing industrial or mining units and/or for setting up of new industrial or mining units, is exempted from 50% of the applicable tax (Article 138, Iranian Tax Code).
· Tax exemption in agricultural sector:
The income derived from all activities in the field of agricultural, animal rearing, stock breeding, fish farming, bee-keeping, poultry, husbandry, hunting and fishing, seri-culture, revival of pastures and forests, horticulture of palm trees, is tax exempted without time limitation (Article 81, Iranian Tax Code).
· Tax exemption in tourism sector:
All enterprises for internal and international tourism obtained exploitation permit from the Ministry of Culture and Islamic Guidance shall enjoy an annual exemption with regard to 50% of their applicable taxes (Note 3, Article 132, Iranian Tax Code).
92. Is there any requirement for enjoying tax exemptions?
Yes, industrial and mining enterprises shall enjoy tax exemptions if located out of a 120-kilometer radius from the center of Tehran or out of a 50-kilometer radius from the center of Isfahan, and also out of a 30-kilometers radius from the administrative centers of provinces and cities with a population of more than 300,000. Industrial Estates established within the same 30-kilometers radius from the later province centers and cities are exception to this rule (Note 2, Article 132, Iranian Tax Code).
93.Shall the establishment of manufacturing units in less developed areas result in increase of the rate and period of tax exemption?
Yes, 100% of taxable income of all units located in less developed areas shall be tax exempted for a period of 10 years.
94.In respect of tax exemptions, is there any distinction between the units located in Special Economic Zones and those of the mainland?
No, In respect of tax exemptions, there is no differences between the Special Economic Zones and the mainland. In fact, tax treatment is the same in all parts of the Country.
95.Shall export income enjoy tax exemption?
Yes, 100% of the income derived from exportation of agricultural and industrial finished goods as well as their conversional and complementary industries, also 50% of the income earned from exportation of other non-oil goods, are tax exempted (Article 141, Iranian Tax Code).
96.What is the tax exemption applicable to transit goods?
100% of the income derived from exportation of different goods that have been, or will be, imported to Iran on transit, and are exported without making any changes in the substance thereof, or doing any works on them, are tax exempted (Article 141, Iranian Tax Code).
97.Do the companies quoted in the Stock Exchange enjoy tax exemptions other than those applicable to industrial, mining, agricultural and tourism units?
All the companies listed in the Stock Exchange whose transition of shares is done by stock brokers are tax exempted equivalent to 10% of their payable tax (Article 143, Iranian Tax Code).
B. Customs facilities and exemptions:
98.Is customs exemption applicable to the raw materials imported on transit to be exported then in the form of manufactured goods?
Yes, the raw materials imported on transit for producing purposes are exempted from customs duties. Any sum paid at the time of importation for any reason, shall be refunded once the said goods are exported.
99.At which price are the imported second hand machinery and equipments evaluated in customs house?
All the imported goods are evaluated at new price in customs; only the second hand machinery and equipments which are imported to the Country for production line under FIPPA, are to be evaluated at second hand price.
FAR law firm