Verified Facts
Tax rates in Iran range from 10% to 35% for individuals, with a corporate tax rate of 25%, and a value-added tax (VAT) rate of 9%, and it is essential for expats and foreign workers to understand the tax system to navigate their obligations.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Iran has a territorial taxation system, which means that individuals and businesses are taxed on their income earned within Iran, regardless of their nationality or residency status. However, individuals who are considered tax residents in Iran are also subject to taxation on their worldwide income. To be considered a tax resident in Iran, an individual must have a permanent home in the country, or have been present in the country for more than 183 days in a tax year. The tax year in Iran runs from March 21 to March 20, which is different from the standard calendar year used in many other countries.
The Iranian tax system is governed by the Direct Taxation Law, which outlines the rules and regulations for taxation in the country. The law provides for various tax incentives and exemptions, including incentives for investments in certain industries and exemptions for certain types of income. Taxpayers in Iran are required to file their tax returns with the Iranian National Tax Administration, which is responsible for collecting taxes and enforcing tax laws in the country.
Personal Income Tax
| Income Bracket (IRR) | Tax Rate |
|---|---|
| 0 - 50,000,000 | 10% |
| 50,000,001 - 100,000,000 | 15% |
| 100,000,001 - 200,000,000 | 20% |
| 200,000,001 - 500,000,000 | 25% |
| 500,000,001 and above | 35% |
| Taxpayers in Iran are entitled to various deductions and allowances, including deductions for mortgage interest, charitable donations, and education expenses. Tax returns must be filed by June 30 of each year, and taxpayers who fail to file their returns on time may be subject to penalties and interest. Taxpayers can file their returns electronically or in person at a tax office, and must provide supporting documentation, such as pay slips and bank statements, to verify their income. |
Corporate & Business Tax
- The corporate tax rate in Iran is 25%, which applies to the taxable income of companies and other business entities.
- Small businesses and startups may be eligible for tax incentives, including reduced tax rates and exemptions from certain taxes.
- Iran has several free zones, which offer tax exemptions and other incentives to businesses that operate within these zones.
- Businesses in Iran must register with the Iranian National Tax Administration and obtain a tax identification number before commencing operations.
- Companies must file their tax returns by June 30 of each year, and must provide audited financial statements and other supporting documentation to verify their income.
VAT / Sales Tax
- The standard VAT rate in Iran is 9%, which applies to most goods and services.
- Certain goods and services, such as basic food items and healthcare services, are exempt from VAT or subject to reduced rates.
- Businesses that are registered for VAT must charge VAT on their sales and remit the tax to the government.
- Tourists may be eligible for a VAT refund on certain purchases, such as hotel accommodations and tourist services.
For Expats & Foreign Workers
- Expats and foreign workers who are considered tax residents in Iran are subject to taxation on their worldwide income, including income earned outside of Iran.
- Iran has double taxation treaties with 48 countries, which can help to reduce the tax burden on expats and foreign workers.
- Expats and foreign workers may be required to obtain a tax identification number and register with the Iranian National Tax Administration.
- Social security contributions are mandatory for expats and foreign workers who are employed in Iran, and are typically paid by the employer.
- Remittances of foreign currency are subject to exchange controls and may require permission from the Central Bank of Iran.
- Expats and foreign workers may be eligible for tax exemptions or reduced tax rates under certain circumstances, such as if they are working on a short-term contract or are seconded to an Iranian company.
Crypto & Investment Income
- Investment income, including dividends and interest, is subject to taxation in Iran, and is typically taxed at the same rate as ordinary income.
- Cryptocurrency transactions, including bitcoin and other digital currencies, are subject to taxation in Iran, and are typically taxed as capital gains.
- Taxpayers who earn investment income or engage in cryptocurrency transactions must report this income on their tax return and pay any applicable taxes.
- The Iranian National Tax Administration has issued guidelines on the taxation of cryptocurrency transactions, which provide clarity on the tax treatment of these transactions.