Provision on Custom Duty Exemption for Imported Production Line Machinery

Nouraei & M. Mostafavi Law Offices – 25 October 2021-Tehran-Iran – Secretary to the chairman of the board of directors at Iran Industrial Equipment Manufacturers Association Ahmad Zolrahmi announced importers of machinery for production lines already manufactured in Iran will have to continue paying custom duty, while those needed to be imported will be exempted.

In an interview with ISNA recently, Zolrahmi referred to inquiries being sent to the association by the industrial, mine and commercial organizations (a.k.a. SAMT) regarding custom duty exemptions on machinery import and said that import of such machinery which are produced domestically will not be entitled to the 8-percent custom duty exemption.

He referred to one of the clauses in Article 119 of Custom Law which allows for all production line machinery be imported without paying custom duty and said, “We asked the relevant authorities to make a provision based on which only those not manufactured in the country be imported duty-free and the rest be taxed. They have agreed with the request.”

Zolrahmi said provincial offices of the Industries, Mines and Commerce Organizations (SAMT) are sending their inquiries to the association and reiterated once against that if a machinery is already made by Iranian manufacturers, it will not be exempted from the 8-pecent custom duty.

According to Zolrahmil, the association received 224 inquiries during the second quarter of the current year (March 21, 2021- March 21, 2022), out of which 75 cases were made in the country. “In other words, 33 percent of the equipment imported could be made in Iran.”

The association had said last year that many companies use the clause contained in Article 119 of the Custom Law and import machinery that can be produced in the country without paying import duty and added-value tax.

According to Article 119 as well as the Memorandum of Understanding between Customs and the Ministry of Industry, Mines and Commerce, once it is verified that a machinery is not produced domestically, certified production units will be entitled to the provision on duty exemption and can release the cargo from the customs within the shortest possible time. As per the commitment provided by the applicant, the imported machinery must be set up at the location of the unit subject to the certification.

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