Iranian Tribunal Rules that Revenues from Credits and financial Facilities Granted by Foreign-based Banks are not Subject to Taxation

Nouraei & M.Mostafavi Law Offices – 10 March 2021-Tehran- The Administrative Justice Tribunal has decreed that as long as foreign banks are not directly accruing revenues in Iran, their loans and credits shall not be subjected to taxation, the Iranian Official Gazette reported on 28 February 2021.

The Tribunal has been formed in accordance with Article 173 of the Constitution of the Islamic Republic of Iran and is delegated to consider the grievances of the public against the unlawful conduct of governmental organs and abolish wholly or partially the state rules and regulations which are in contravention of the law.

In its decree No. 9802329 dated 20/10/1399 (30 December 2020) the Tribunal has ruled as follows:

‘’In accordance with Part 5 of Article 1 and Note 2 of Article 105 and Part (C) of Article 107 of the Direct Taxation Act approved in 1366 (1988) with subsequent amendments:’’ Any non-Iranian person whether natural or juridical shall be subject to pay tax in Iran in proportion to the revenues accrued in Iran. However, with respect to the revenues accrued from Iran, the purpose of the legislation has been exclusively aimed at the revenues generated from assignment of concessions or other rights and or rendering technical instructions and aids and or movie screening rights and not anything else. Hence, other revenues procured from Iran which are not included in the aforesaid cases, such as profit and fees related to credits and financial facilities granted by foreign financial institutes domiciled abroad who have no operational activity in Iran, shall not be subject to payment of tax to the government of the Islamic Republic of Iran. With regard to the banks which are explicit examples of foreign juridical entities, if it is established by the related evidence and documents that they have accrued income through their representation in Iran, they shall be subjected to taxation in proportion to the revenue accrued’’.  

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