The Iranian National Tax Administration under the Ministry of Finance and Economic Affairs is in charge of levying and collecting taxes. In 2008, around 55% of the government’s budget came from oil and natural gas revenues, and the rest was from taxes and fees. Every salary earner is a taxpayer here, regardless of their residency status in the country.
Tax payment requirement
Citizens living in the country are expected to pay tax on all their income earned in Iran or overseas. Foreign employees working within the nation have to pay equal income tax based on their salaries earned. Non-residents are subject to paying tax only on the income made here. As a rule, foreigners under employers may not apply for an exit visa unless they submit evidence of the payment of their due taxes.
Tax Rates
| Individual Business Income in IRR | Income Tax Rate |
| Up to 40,000,000 (US$160) | exemption |
| 40,000,000 to 80,000,000 (US$320) | 10% |
| 80,000,000 to 120,000,000 (US$480) | 15% |
| 120,000,000 to 180,000,000 (US$720) | 20% |
| 180,000,000 to 240,000,000 (US$900) | 25% |
| 240,000,000 to 320,000,000 (US$1200) | 30% |
| In excess of 320,000,000 (US$1200) | 35% |
Islamic taxes
Aside from mandatory taxes, this tax is collected of one’s own volition. Forms of this include one-fifth of an individual’s income tax; an alms tax (zakat), which has a variable rate; and a land tax (Kharaj), the rate of which is based on the rule of one-tenth the value of crops (Ushr), except the land, is tax-exempt.
Real estate tax
Every rental income is liable to a real estate income tax. A 25% fixed rate of gross income is deducted from all taxpayers to account for income-generating expenses. The net income, which is 75% of the total rent, is then subjected to the same rates as given above with a maximum of 35%.
| Rental income | Rate |
| up to 500.000.000 IRR | 15% |
| 500.000.000 to 1.000.000.000 IRR | 20% |
| In excess of 1.000.000.000 IRR | 25% |
Inheritance tax
Inheritance taxes are charged at rates depending on the relationship between the deceased and the heir.
Group I: first-degree heirs such as parents, spouse, children, and grandchildren
Group II: second-degree heirs such as grandparents, brothers, sisters, nieces, nephews, etc.
Group III: third-degree heirs such as uncles, aunts, cousins, etc.
Corporate income tax
The new rate for corporate tax is 25 percent payable on the earns of corporate commercial entities. This rate replaces the previous corporate tax of 10 percent and increases rates of income tax (12-54 percent) on reserves and distributable income. Aside from the 25 percent corporate tax and the 0.3 percent Chamber of Commerce tax, no more taxes will be paid by the corporate entity or the shareholders. The new rate also applies to joint venture corporate entities that are legally registered. The tax deduction shall be on the corporate entity and not the shareholders.
Double taxation
Citizens from countries, that have signed double taxation avoidance agreements with Iran, do not pay taxes in their home country or location of business. Some of the countries include Algeria, Austria, Azerbaijan, Bahrain, Belarus, Bulgaria, etc.
Value-added tax (VAT)
The sales tax rate was charged at 3%, in 2008 but later changed to 9% in 2011. When the Value Added Tax Act (VATA) was initially put into effect, citizens called off its implementation after 10 days of national widespread demonstrations. This Act has replaced all prior laws and regulations as regards indirect taxes, which include sales tax. In line with the VATA, all supply of commodities and services, as well as their imports and exports, will be liable to the provisions of the law.
