A Review of the Iranian Tax System
1. Tax Bases and Rates

The Iranian tax system is divided into two general categories of direct and indirect taxes. The share of direct taxes from the total tax revenues is almost 68% currently. There are two major types of direct taxes including income taxes and property taxes.  Each category of direct taxes, in turn, is divided into sub-parts. Indirect taxes include taxes on imports and Value Added Tax (VAT). Taxes on imports are currently collected by the Iranian Customs and are not within the jurisdiction of INTA. Table 1 briefly shows various types of taxes in the Iranian taxation system

    Table (1):  The Iranian Tax System

Tax Category
Tax Type Tax BaseAct/


Taxable Income Taxable Persons Tax Rates
Direct Taxes Income TaxesReal Estate Income Tax DTA – C/I/52-58Income of persons derived from transfer of rights in immovable properties situated in Iran, less the exemptions: total rent, less a deduction of 25% for expenses, depreciations, and commitments of the owner in regard to the property. Owners who have rented their immoveable properties to others 15%-35%
Employment Income TaxDTA -C/III/82-92Salaries, wages or any other remuneration received by individuals in respect of their employment services. Payments for works conducted out of Iran, shall be subject to the tax, provided that the payer is an Iranian resident.   Individuals 10% for public sector employees and the others 10-35%
Individual Business Income Tax DTA -C/IV/ 93-104Unincorporated business activities (aggregate sale of goods and services) less the exemptions provided in the DTAIndividuals 15-35%
Corporate Income TaxDTA -C/V/105-118Aggregate profits of companies, and the profits from the profit-making activities of other legal persons, derived from sources in Iran or abroad, less the losses from nonexempt sources and minus the provisioned exemptionsLegal Persons 25%
Tax on Incidental IncomeDTA -C/VI/11119-131Income earned ex gratia or through favoritism or as an award. Real or legal person 15-35%
Property TaxesTax on Transfer of Real PropertiesDTA -C/I/59-80Final transfer of real estates & goodwill shall be subject to taxation at the date of transfer.   Real or legal person 5% & 2%
Tax on Transfer of Shares DTA -D/I/143Nominal value of transfer of shares Joint Stock Companies and other Companies 0.5% & 4%
Inheritance TaxDTA -B/IV/17-43Any estate left from the deceased individual. Real person 5-65%
Stamp DutiesDTA -B/5/44-51Each sheet of check printed by banks (Rls. 200), bill of exchange, promissory notes (0.3%), and other documents and negotiable papers with specified amounts.    As provisioned in Articles 44-51
Indirect Taxes VATValue Added VATAValue added resulting from the sale of all goods and services and their imports, except 17 items listed in Article 12 of the VAT Act (VATA) as the exempted onesReal and Legal Persons 6% currently, to be annually increased for 1% up to 8% by the end of the 5th Development Plan


Taxes on ImportsCurrently collectible by the Iranian Customs Organization.  

Some of the most important tax rates are as follows:

                                                               Table (2):  Most Important Tax  Rates

Tax bases Tax rates
Company Income Tax25%
Real Persons Income TaxRates of the Article 131
Up to IRR 30,000,00015%
30,000,000 to 100,000,00020%
100,000,000 to 250,000,00025%
250,000,000 to 1,000,000,00030%
Over 1,000,000,00035%
Public Sector Salaries Income Tax10% on annual income
Private Sector Salaries Income TaxUp to IRR 42,000,00010% on annual income
Over IRR 42,000,000Rates of Article 131
Rental Income TaxRates of Article 131
Transfer TaxGoodwill2%
Real properties5%
Shares0.5% (listed companies’ shares)
4% (other companies)
Value Added Tax

2. Taxation from foreign investors in Iran
Direct Taxes
All non-Iranian real or legal entities for the income earned in Iran and also for the income gained through granting of license or other rights, technical and educational assistance or movie contracts in the territory of Iran are subject to taxation. Depending on the type of activity of the foreign investor, various taxes and exemptions are applicable, including profit tax, income tax, property tax, etc.
Foreign investors in Iran enjoy the same supports and privileges that are offered to the Iranian investors. This means both Iranian and foreign investors pay the same amount of taxes. Tax exemptions and discounts are also equally granted to domestic and foreign investors.
Since foreign investments are usually active as legal entities, we will hereunder focus on rules and regulations for Corporate Income Tax.

Corporate Income Tax
a) General Issues
Foreign legal entities residing abroad shall be taxed at the flat rate of 25% in respect of the aggregate taxable income derived from the operation of their investment in Iran or from the activities performed by them, directly or through the agencies in Iran.
The legal entities shall not be subject to any other taxes on the dividends or partnership profits they may receive from the capital recipient companies.
Legal entities are obligated to, even within the exemption period, submit declaration and profit and loss balance sheets, provided from their official statutory books, maximum four months after the tax year (March 21 each year until March 20 next year)  along with the list of partners and shareholders, their shares and addresses to the tax department within the area of the activity of the legal entity. If these legal entities do not submit the documents within the stipulated time span, the tax exemption will be null and void