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institution but interest paid or Value of unlisted companies. nonresidents.

Interest paid to Real State Tax: Final transfer of real properties as well as the transfer nonresidents is subject to a 5% of goodwill is subject to a fixed rate. special defense contribution deducted at source. The basic of taxation shall be Iran Highlights taxable value in case of real state at Royalties- Royalties paid to Currency: Iranian Rials(IRR) 5% of the so-called and 2% value nonresidents for the use of rights in Foreign exchange control: No received by the owner or possessor Iran are subject to a final Accounting principles/financial of the right in case of goodwill. withholding tax of 5% for Statements: IAS/IFRS. Financial Losses-Tax losses can be carried manufacturing and governmental Statements must be prepared forward and set off against taxable section and , and 7.5% on all other annually. income of subsequent years without royalties. These rates may be Principal business entities: These any time limit. reduced under a tax treaty. Royalties are the public and private limited paid to nonresidents for the use of Tax rate-Companies, includes all liability company, partnership and kind of corporate bodies, and are rights outside Iran are exempt from branch of a foreign corporation. subject to corporation tax at affixed withholding tax. There is no Corporate taxation: withholding tax on the payment of rate of 25%. Residence- A Company is resident Certain types of income (i.e. royalties by a resident company to in Iran if its management and another resident company. dividends, interest and rent) for control is exercised in Iran. foreigners residing abroad subject to Branch remittance tax – No Registration in Iran is not decisive. a special defense contribution at the Other taxes on Corporations: Basis-Resident companies are taxed rate of 5% and 7.5% respectively. Stamp duty – Capital duty is on worldwide income. Foreignpayable on authorized share capital Surtax – No source income derived by tax and the issuance of shares at a rate Alterative minimum tax - No resident companies is subject to Foreign tax credit- Relief for taxes of 0.2%. corporation tax in the same way as paid abroad is granted against Iran Payroll tax- Employers are required Iran source income. tax due in the form of a tax credit. to withhold personal tax on the Branches are taxed the sane way as The relief is given unilaterally salaries of employees under the domestic companies. regardless of the existence of a tax PAYE system. Taxable income-Corporation tax is treaty. When a treaty applies, the Real property municipal tax – Tax is imposed on business profits; interest treaty provisions apply if more imposed annually on the and discounts; rents, royalties, governmental value of immovable beneficial. remunerations or other profits from Participation exemption- See under property. property, and net consideration in "Taxation of dividends", see also Social security – Employers must respect of trade goodwill. Expenses "Capital gains". make social insurance contributions incurred for the production of amounting to 23% of gross salary. Incentives – Special taxation income are tax deductible. The maximum amount of annual regimes exist for ship-owning Losses brought forward or earning on which the contributions companies that have Iran flag surrendered by company can be set vessels and ship management are payable is variable and for year off against taxable profits. ended March 21, 2009 is about Euro companies. Taxation of dividends-Dividends 1423 (1423x23%=328). Withholding tax: received from companies located in Dividends-. Dividends paid to Additionally, employee is required Iran are exempt from corporation resident or nonresident (individual to make a contribution of 7% to the tax but dividends received from social cohesion fund on all earning & companies) are not subject to companies located out of Iran are of employees till cap 1423 Euro. withholding tax. subject to corporation tax Interest- There is no withholding tax Transfer tax – Transfer of Capital gains- sale value of immovable property are subject to on interest and fees paid made to securities and listed companies are Iranian banking, cooperative funds transfer fees ranging from 5% taxable at .05% and 4% for face calculated on the special value of and authorized non-bank credit

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defense contribution at the rates of both the decedent and the heirs are the property as estimated by the Iranian nationals domiciled abroad. Iranian National Tax administration. 15%, 20% ,25%,30% and 35%, In the case of foreign nationals as respectively. Residence-An individual is resident well as in other cases, any part of Anti-avoidance rules: Transfer pricing – The arm's length in Iran if he/she stays in Iran for a the deceased person's properties and principle requires that transactions period or periods exceeding in the property rights that are situated in between related parties be carried aggregate 183 days in the tax year. Iran shall entirely be subject to taxation at the rates provided in the out at market value and on normal Filing status – Each individual is assessed on a separate basis. Joint Article 20 of the present Act in commercial terms. respect of the heirs of second class. assessment for couples is not Thin capitalization – No Net wealth/net worth tax – No Controlled foreign companies – No possible. Taxable income- Personal income Social security – Employees are Other – Under a general anti – tax is imposed on business profits, required to make social insurance avoidance provision, any contributions at a rate of 7% of their artificial/fictitious transaction may income from an office or employment, discounts, pensions, salary, up to a maximum amount of be disregarded and the Commissioner of Income Tax may charges or annuities, rents, royalties, EUR 1423. Self-employed assess tax on the person conceded. remuneration or other profits from individuals contribute at 7%. The contribution is calculated on property and net consideration in Disclosure requirements – No respect of trade goodwill. Expenses notional income, which varies Administration and compliance: according to the trade or profession. incurred for the production of Tax year – The tax year is the Unemployment tax: No income are tax deductible. calendar year. The accounts of a Residence Rules: All the national of company may be closed on a date Capital gains – See under countries with double taxation are different from 21 March, in which "Corporate taxation". case, taxable profits are apportioned Deductions and allowances – The considered to be resident of Iran for on a time basis to the relevant tax most important personal deductions tax propose if their reside in Iran are: donations to approved charities; more than 183 days per each year. years. Consolidated returns – Taxation on social insurance fund contributions Administration and compliance: Tax year – Calendar year a consolidated basis is not permitted (and similar contributions paid abroad); life insurance premiums; Filing and payment – Tax on and each company is required to employment income is withheld by pension plan contributions; and submit a separate return. the employer under the PAYE Filing requirements – Tax returns medical fund contributions. Rates – The first IRR 50,000,000 is system and remitted to the tax must be filed by 31 Tir (July 22) following the accounting year end. tax free with progressive tax rates authorities. Self-employed individuals pay tax through the imposed up to 35% on remaining Companies are required to pay provisional and self-assessment provisional tax accompany tax file amounts. systems. Tax returns must be filed received. Other taxes on individuals: by 31 Tir ( July 22) following the Penalties – A fixed penalty of 2.5% Capital duty – No per month is imposed for late filing. Stamp duty – See under "Corporate tax year for employees; for selfemployed persons who are not taxation". Rulings- Rulings are available to required to file audited accounts and Capital acquisitions tax – No interpret the law. self-employed persons whose Real property tax – See under Personal taxation: returns are accompanied by audited "Corporate taxation". Basis – Resident individuals are Inheritance/estate tax – If as a result accounts. subject to income tax on their of a person's death, whether actual Penalties- See under "Corporate worldwide income. taxation". Nonresident individuals are taxed or presumptive, any estate is left from him, it shall be imposed where only on their Iran-source income. Some types of income (rent, salary, the decedent or the heir or both of Value added tax: them or Iranians and reside in Iran, Taxable transactions – VAT is interest, inheritance, incidental the tax shall be imposed, and Where levied on the sale of goods, the and ...) are subject to a special

provision of services and the import determination of what the of goods from outside the Iran. company's tax liability should be. Rate – The standard rate is 3% Registration – The registration Statutory Inspectors (Auditors) threshold for VAT purposes is The law requires the election, by the EUR 230,800. of a statutory Filing and payment – The deadline shareholders, inspector and alternate inspector for submission of quarterly VAT returns is the 15th after the second once a year at the ordinary general month following the relevant period. meeting. The election of more than Payments of VAT must be made by one inspector and alternate inspector the same date. is optional. In general, the function Source of tax law: Direct Income of the inspector is to serve as a Tax Law, Special Defense watchdog over shareholders and Contribution Law , VAT Law third parties interests and he may be prosecuted criminally for violation Tax treaties: Iran has concluded of his duties. Certain categories of more than 40 tax treaties as persons such as criminals, the Germany, France, Armenia, directors and their relatives, and persons doing business with the SouthAfrica, Kazakhstan, company are disqualified from Turkmenistan, Lebanon, Georgia, serving in this post. Among other and Ukrain, Belarus things, the inspector is required to Syria,SriLanka,Russia,China,Switze submit a report of the ordinary rland,Pakistan,Austria,Uzbekistan,T general meeting each year. urkey,Tunis,Kyrgyzstan,Spain,Pola nd,Bulgaria,Venezuela,Bahrain,Jord on,Malaysia,Croatia,Bosnia&Herze govi,Qatar,Indonesia,Tajikistan,Ko wait,Zimbabve,Indonesia,Malsia,Ro mania,Sudan,Oman,Algeria Tax authorities: Iranian National Tax administration. Free Zone: Iran has several industrial & trade free zone that are tax exemption for 15 years .

Tax sources in Iran: www.intamedia.ir www.iacpa.ir Both the public and private joint www.worldwide-tax.com/iran stock companies are required to www.vat.ir maintain in the Persian language the www.dayarayan.net journal, ledger, inventory and copy book of merchants. These books serve as the basis for determining the company's tax liability and failure to keep them strictly in accordance with the legal requirements may result in the tax authorities making their own

Books of Account