Business Environment

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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The financial year begins on March 21st and ends on March 20th of the following year.
Accounting Standards
The International Financial Reporting Standards (IFRS) has developed gradually in Iran. However, there are still differences between the national standards and the IFRS standards.
Accounting Regulation Bodies
Audit company
Accounting Reports
Profit and loss account, auditors' report, balance sheet.
Publication Requirements
Financial statements must be submitted annually.
Professional Accountancy Bodies
Iranian Association of Certified Public Accountants , In Farsi.
Certification and Auditing
According to Iranian legislation, certain companies should be audited by Iranian certified Public accountants (IACPA). For more information see Dayarayan website.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
VAT
Tax Rate
9% (including 6% VAT and 3% municipal excise duties collected under the VAT Act)
Reduced Tax Rate
Several goods and services are exempt, including unprocessed agricultural goods; live birds and pet animals, aquatics, honey bees, and silk worms; fertilizers, poisons, and seeds; flour, all types of bread, meat, sugar, rice, grains, soya, milk, cheese, vegetable oil, and formula as babies food; books, press goods and newspaper, notebooks, and paper for printing, writing, and newspapers; goods gratuitously donated to ministries and government agencies, and non-governmental public institutions; goods imported by passengers as accompanied luggage for personal use, up to the quantities authorized by export & import regulations, beyond which shall be taxable; immovable properties; pharmaceutics, medical treatment services (man – animal), as well as rehabilitation services; services that are subject to salary income tax in accordance with Direct Taxes Act; services of banks and authorized non bank credit institutions; public inter-city and intra-city passenger transportation services; handmade carpets; research and educational services; nourishment of birds and et animals; radars and aerial navigation equipments used at airports, and items exclusively used for defensive and security purposes.
Other Consumption Taxes
Excise duties are levied on tobacco products and petrol. There are special VAT rates for the following goods:
- different kinds of cigarette and tobacco products (12%)
- different kinds of gas and fuels of airplanes (20%).

In addition to the standard rate, other rates are also applied as municipal taxation as follows:
- different kinds of cigarette and tobacco products (10%)
- different kinds of gas and fuels of airplanes (10%)
- kerosene and gas oil (10%) and mazut (5%)

Transfer of domestically-produced and imported automotive vehicles except for those used in road construction, workshops, mines, and agriculture and except for ships and boats, motorcycles and motor tricycles shall be subject to a tax at the rate of 1% (1% of factory sales price of domestically-produced vehicles or 1% of the sum of the CIF value of the goods together with the tax duties and charges, commercial duties and other charges mentioned in the customs documents).

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Corporate Taxes

Company Tax
25%
Tax Rate For Foreign Companies
Foreign companies are treated as local companies for fiscal purposes, but only on their Iran-source income. If a foreign company registers a branch in Iran, such a branch will be taxed in Iran only on the profits derived from the work that has been done inside the country.
Branches and agents of foreign companies and banks in Iran, that, without having the right to make transactions, are engaged in marketing and gathering economic information in Iran for their parent enterprises, and receive remuneration from them against their expenditures, shall not be subject to taxation in respect of such remuneration.
Capital Gains Taxation
Capital gains are not subject to tax in Iran.
Main Allowable Deductions and Tax Credits
In order to be deductible, expenditure must be supported, to a reasonable degree, by documentary evidence and be exclusively connected with the earning of income during the fiscal year in question.
Deductions include amortisation and depreciation, insurance premiums, research and development and training expenditure, transportation expenses, interest fees (except for intercompany non-bank interest fees), fines paid or allocated to banks, taxes, bad debts, personnel cost, rent of machinery and equipment; costs of fuel, electricity, lighting, water and communication; business insurance, royalties, duties and taxes paid; cultural, sports and welfare expenditures paid in respect of workers to the Ministry of Cooperatives, Labor and Social Welfare up to a maximum amount of IRR 10,000 per each worker; expenses incurred in the maintenance and upkeep of the premises; transportation expenses; etc.
Losses may be carried forward indefinitely,
but may not be carried back.
Other Corporate Taxes
Other taxes include: Real estate income tax (rates varying between 15% and 35%, after a flat 25% deduction), Transfer tax (5% for real estate and land transfer, 2% for the transfer of goodwill), Payroll tax (withheld by the employer), Stamp duty (0.05% on the issuance of shares), Social security contributions (23% for the employer), social security retention/withholding (5% for payments to contractors).
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Iran Middle East & North Africa United States Germany
Number of Payments of Taxes per Year 20.0 20.8 10.6 9.0
Time Taken For Administrative Formalities (Hours) 216.0 204.0 175.0 218.0
Total Share of Taxes (% of Profit) 44.7 32.1 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Annual taxable income (employment income) up to 35%
From IRR 0 to 672 million 0%
From IRR 672 million to 1,800 million 10%
From IRR 1,800 million to 3,000 million 15%
From IRR 3,000 million to 4,200 million 20%
Above IRR 4,200 million 30%
Individual business income From 15% to 25%
Up to IRR 500,000,000 15%
From IRR 500,000,001 to 1,000,000,000 20%
Above IRR 1,000,000,000 25%
Allowable Deductions and Tax Credits
The main personal deductions are donations to approved charitable institutions; social insurance fund contributions (and similar contributions paid abroad); life insurance premiums; pension plan contributions; and medical fund contributions.
Employees may also deduct from taxable income any payments made for housing loans.
Pensions, retirement allowances and termination of employment payments are exempt from PIT, as well as service-related travel expenditure and allowances, employees’ medical expenses met by employers.
Special Expatriate Tax Regime
There is no special tax regime for expatriates. However, expatriates may be exempt from social security contributions if their country of origin has concluded a social security agreement with Iran.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of fiscal conventions signed by Iran
Withholding Taxes
Dividends: 0; Interests: 5%; Royalties: 5%/7.5%.

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Intellectual Property

National Organisations
On July 6, 1993, the Iranian Parliament adopted the amended text of the Paris Convention dealing with industrial property. This Parliament also authorized the government to sign the Convention creating the WIPO (branch of Paris Convention) signed on 14/07/1967 at Stockholm as well as the amendments which followed on 2nd October 1979. See the WIPO site.
The website gives useful information on the various organizations dealing with questions of intellectual property in Iran.
Regional Organisations
no
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent and Trademark Registration Law, July 1931.
Trademark
 
Patent and Trademark Registration Law, July 1931.
weak Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
no law
 
Copyright
 
Law for the Protection of Authors
WIPO Copyright Treaty
Industrial Models
 
no law
 

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Legal Framework

Independence of Justice
The judiciary is not independent in Iran. The Supreme Leader directly appoints the head of the judiciary, who in turn appoints senior judges.
Equal Treatment of Nationals and Foreigners
Foreign nationals cannot expect a fair trial from the country's judicial system.
The Language of Justice
The language of justice is Persian.
Recourse to an Interpreter
It is possible to have an interpreter.
Sources of the Law and Legal Similarities
The main source of the law is the constitution of 1979 (revised in 1989), which codifies Islamic principles of the government.
Checking National Laws Online
Iran laws on-line

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Standards

National Standards Organisations
ISIRI, Institute of Standards and Industrial Research of Iran.
Integration in the International Standards Network
The Institute of Standards and Industrial Research of Iran - ISIRI, has been authorized to lay down standards. ISIRI is a member of the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), the International Organization of Legal Metrology (OIML), Pact Meter about the International Office of Weights & Scales (BIPM), and member of the World Association of Industrial & Technological Research Organizations (WAITRO).
Classification of Standards
Iran applies the national standards (ISIRI) and the ISO.
Online Consultation of Standards
Iranian standards can be consulted on the ISIRI website.
Certification Organisations
Institute of Standards and Industrial Research

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Business Practices

General Information
Buzzle, Summary on business practices in Iran
kwintessential , cross cultural solutions
Opening Hours and Days
Government organizations can be contacted from 7:30 to 14:30 from Saturday to Wednesday and 7:30 to 13:30 on Thursdays. Businesses are open from 8:30 to 12:30 and after the lunch break up to 7 p.m. On Thursday, companies are open from 8:30 to 12:30. Stores are open from 9:00 to 13:00 and 16:00 to 20:00. Thursday and Friday are weekends in Iran.
 

Public Holidays

Death of Imam Hossein January 29 and 30
Victory of Islamic Revolution February 11
40th day after Ashura (main religious festival of Shiism) March 10
Nationalization of oil March 20
New year March 21-24
Day of the Islamic Republic April 1
 
 

Periods When Companies Usually Close

Holidays of the new year from mid-March to start April
 

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Latest Update: November 2022