‘Eliminating tax exemption in free zones not on agenda’

October 21, 2019

TEHRAN - The secretary of Iranian Free Zones High Council said eliminating tax exemptions in the country’s free zones is not on the agenda of any official government or legislative bodies, IRNA reported.

Mentioning recent comments by some government officials about changing the regulations regarding the tax exemptions in free zones, Morteza Bank said, “In the country’s law regarding the free trade zones, a 20-year period has been provisioned for the current tax exemptions.”

For many years, Iran’s free and special economic zones have provided various incentives to attract investors, one of which is tax exemption. This issue has recently been criticized by some government officials and some are demanding elimination of such exemptions.

“Taxation is a central issue in free zones. One of the most important elements of free zones is tax exemptions and customs fee exemptions, and this is the case not only in Iran but throughout the world,” Bank said.

Earlier on Sunday, Iran’s deputy finance and economic affairs minister announced that his ministry is planning on amending the regulations pertaining to tax exemptions in the country’s free economic zones.

Mentioning the criticism facing the tax exemptions in free zones regarding their ineffectiveness, Mohammad-Ali Dehqan Dehnavi noted that supporting the country’s free zones as gateways to development of trade is important, however considering the abuses that are resulted from such support, it seems that some amendment is in order.

“The solution is to reform the current path; it can include removing exemptions altogether or regulating and monitoring them,” he said adding that “Iranian National Tax Administration (INTA) is just needed to be provided with sufficient information on economic activities in the mentioned zones [to make the necessary decision].” 

According to Dehnavi, the country’s free zones are currently in charge of their economic information, and the Tax Administration has no authority in this regard.

“If this information is made available to the tax office [INTA], it will certainly help prevent tax evasion,” he said, adding “If all the country’s economic information could be collected into one comprehensive database in the form of a tax plan, we would surely see good results.” 

EF/MA

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