Tax and Customs Facilities & Exemptions

What does tax exemption mean and what items are included in it?

By tax exemption, it means exemption from paying income tax for the revenue earned in industrial, mining and production activities. In Iran, companies are obligated to deduct the dividends tax- which is considered as natural person tax as well- in the tax source and pay that amount to the relevant tax office (article 132 of Direct Tax Act).

What are tax exemptions and in what conditions they are calculated?

Tax exemption in industry, mine and production- income liable to tax return for the income gained by production and mining activities in the cooperative and private sectors, amounting to 80 percent, is exempted from tax payment for four years from the date of utilization or extraction date (article 132 of Direct Tax Act). A portion of declared profit earned by cooperative and private companies which is consumed for the reconstruction, development, rebuilding and/or completing the existing industrial and mining activities and/or for developing new industrial and mining units will be exempted from 50 percent of the levied tax (article 138 of Direct Tax Act).

Tax exemption of agricultural sector

The income gained by any agricultural, cattle breeding, livestock, fish farm, bee keeping (apiculture), birds and poultry, fishery, silk worms, restoration of ranges and forests, gardens, trees and palm trees are tax exempted with no time limitation (article 81 of Direct Tax Act).

Tax exemption in tourism sector

All tourism installations with utilization license issued by Ministry of Culture and Islamic Guidance are exempted from 50 percent of tax annually (note 3, article 132 of Direct Tax Act).

Are there any conditions to allow benefitting from tax exemptions?

Yes. Tax exemption for industrial and mining sectors is possible if those units are built beyond 120 kilometres distance radius of Tehran, 50 kilometres radius from Isfahan, 30 kilometres radius from central cities provinces and cities with more than three hundred thousand people population. Industrial townships inside this 30 kilometres radius are excluded from the mentioned condition (note 2, article 132 of Direct Tax Act).

Does development of units in deprived regions cause an increase in the amount and period of tax exemption?

Yes, 100 percent of the incomes liable to tax for all units which are established in deprived regions have tax exemption for 10 years (article 132 of Direct Tax Act).

Is there any differences between the units in special economic zones and other units in main land regions in terms of tax exemption?

There are no differences between main land and special economic zones in terms of tax exemption. In fact, the tax behaviour in special zones and main land is the same.

Is export income tax exempted?

Yes, 100 percent of the income of exporting, the cost price of industrial and agricultural products, processing industries and completion products, and 50 percent of the income from exporting other non-oil products are tax exempted (article 141 of Direct Tax Act).

How is transit tax exemption?

100 percent of the income from exporting different goods which are transited to Iran and are exported without any changes in their nature or undergoing any process are tax exempted (clause B, article 141 of Direct Tax Act).

Are companies enlisted in Securities Exchange Organization (SEO) benefit from any other tax exemption in addition to the tax exemption calculated for industrial, mining, agricultural and tourism companies?

All companies enlisted in SEO whose stock transfer is done via stock brokers will benefit from 10 percent tax exemption (article 143 of Direct Tax Act).

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