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01 November 2012 [12:20] - Today.Az


The Chairman of Tehran's Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) Yahya Al-e Eshagh announced on Tuesday that tax revenues will replace oil crude export incomes in next year's budget. Iran's solar year starts on 20 March.

Before, Iran's Oil and Economy ministers talked about a similar plan, saying that for compensating the drop in oil export incomes because of sanctions, reforming the taxes laws and increasing taxes revenues are an option.

According to current yearly budget, tax income shares seven percent of Iran's GDP, with $27.7 billion worth. The Iranian Parliament ratified the crude oil export volume at 2.740 mbpd (including 340,000 barrels of condensates) at $85 per each barrel of crude oil. In total according to budget, the oil export revenue for the current solar year is expected to be $72.598 billion.

Iran's current yearly budget amounts at $462 billion based on the official USD rate in Iran.

On the other hand, according to budget bill, the Iranian government expected to produce 4.05 mbpd crude oil and condensates.

However, OPEC reported last month that Iran's crude oil output has fallen to 2.63 mbpd, indicating a 1.42 mbpd difference with the budget bill's forecast. And according to the IEA latest report, Iran's crude oil export has dropped to 886,000 barrels per day, about 1.854 mbpd less than budget bill's figure.

Oil shares 50 percent of government revenues directly and 70 percent of revenues indirectly (custom revenues and petrochemicals export). Regarding the huge amount cut in both oil crude output and export, it's predicted the Iranian government would face a huge financial deficit during current year.

The Vice Parliamentary Speaker Mohammad-Reza Bahonar said on Sep. 24 that Iran's budget bill for the current solar year was approved at $5, 660 trillion rials(about $462 billion), but only 1000 trillion rials of that has been realised during the six months of the current solar year.

This means, only 20 percent of the Iranian government's total revenue according to the budget bill has been realised during six months. Then, Iran has had to compensate its oil income drop with other measures, especially tax revenues.

Giant entities exempt from paying taxes

One of the problems in Iran's taxation sector is the existence of unaccounted economic activities which share 21 percent of the Iranian economy.Meanwhile 60 percent of the economic sectors in Iran do not pay any taxes according the Strategic Research Centre of Iran Expediency Council's latest report, written by Iran's former deputy Oil Minister during Mahmoud Ahmadinejad's first presidency, Akbar Torkan.

Custom duties which are expected to reach 7.8 billion dollars, share only 29 percent of total tax revenues in Iran. Therefore paying more attention to other tax revenue sectors including entities, companies and firms is vital.

However, Iran's major economic entity the Khatam al-Anbia construction firm belongs to The Islamic Revolutionary Guard Corps (IRGC), which won hundreds of lucrative government contracts, including more than $25 billion worth of oil contracts (until June 2011) is exempted from paying any tax.

Khatam al-Anbia has also billions worth of contracts in construction, telecommunication, power generation, pipeline construction, gas and banking sectors. According to Khatam al-Anbia's official website, this entity has finished construction of 1836 projects, while it has 288 uncompleted projects.

IRGC has reportedly hundreds of other subsidiaries which are exempt from paying taxes.

Iran's Police Cooperative Foundation is another huge entity that never pays tax.

The other huge tax exempt entity that holds 45 percent of the holy city of Mashhad's lands and earns hundreds of million dollars, including yearly 160 million dollar from renting the lands (based on official reports) is Astan Quds Razavi, an autonomous charitable foundation with billions worth of assets.

Excluding these types of entities from tax exempt status would increase Iran's revenue significantly, but regarding this fact that the aforementioned giant entities haven't published their exact activities, concrete revenues and assets and also lacking government and parliament's scrutiny on them, are major problems in developing tax rules.


Dalga Khatinoglu /Trend/


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