Nouraei & M. Mostafavi Law Offices – October 6,2024- Tehran- According to Iran’s current laws and regulations, some exported goods and services are exempt from income tax. In Article 141 of the Direct Taxation Act, one hundred percent (100%) of the income from the export of services and non-oil goods and agricultural products, as well as twenty percent (20%) of the income from the export of raw materials, are taxed at a zero rate. To enjoy tax exemption, exporters have to return the foreign currency obtained from their exports.. Failure to do so would result in the payment of the applicable tax, and in severe cases, criminal prosecution. However, Mr.Mohammad Hadi Sobhanian, the head of the Tax Affairs Organization, has recently declared an exception to this rule for service exporters, citing some of the supporting laws and regulations.
This recent regulatory change is a significant update for all exporters.
In his circular No. D/200/48326 dated 8/7/1403 (September 29, 2024), Mr. Sobhanian has referred to the Law Amending the Law on Combating Contraband Goods and Foreign Currency, approved on 10/11/1400 (January 30, 2022 ), and the Executive by-law of Note (6) of Paragraph (C) of Repeated Article (2) of the Law above. He concludes that: “Since the provisions of the Law above are related to goods exporters and on the other hand, there is no provision in the budget laws of 1402 (March 21, 20243- March 19, 2024) and 1403 (March 20 2024-March 20 2025) regarding the necessity of clearing the foreign exchange obligation of service exporters, therefore granting any tax exemption on the income from the export of service exporters, including technical and engineering services and other service areas in the years 1402 and 1403 will not depend on the return of the currency from the export of services to the country’s economic cycle.
Exporters are allowed to sell their export earnings to importers and other people in accordance with the regulations of the Central Bank of Iran (CBI).
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