Lack of awareness of taxpayers about the tax collection process in many cases results in their being deprived of legal facilities and tax exemptions and also provides for the imposition of numerous penalties (fine). According to this, raising taxpayers’ awareness of the tax collection process can be a great help in fulfilling legal obligations. It should be noted, however, that the deduction and payment of employee payroll taxes is the responsibility of the employer, and employees will have no responsibility in this regard.
Tax collection begins with the issuance and notice of a definitive tax return (form) to the taxpayer. Accordingly, the taxpayer proceeds to pay the tax or arrange to pay its debt by referring to the relevant tax office in the place of its activity. If the tax liabilities are settled, the tax collection process ends; otherwise demanding the payment of the tax will be assigned to the tax office. According to the regulations, if the taxpayer fails to pay the tax within the 10-day deadline from the date of the payment notice, it proceeds go to the enforcement stage. This phase begins with the issuance of the execution writ, which contains information such as the type and amount of taxes, definitive debt identification documents (proof of debt), and the year of performance (operation), previous amounts paid and the fines.
At this point, the Department of Revenue and Enforcement provides a one-month deadline for the payment, and if the tax is paid within the deadline, the taxpayer’s commitment is made and the tax operation is terminated. Otherwise, a new phase starts. At this stage, the debtor’s property, up to the amount of debt and fines after deducting previous payments plus 10% of the debt, prioritizing liquid assets, will be confiscated. Initially, cash and movable property would be confiscated and in case these assets are not enough for payment of the debt or accessible, the immovable properties and financial claims would be confiscated. Through the sale of the confiscated property via auction, the tax payer debt and expenses will be settled.
However, in case of confiscation of the tax payer’ properties, the tax payer may release its confiscated properties if the tax payer proceeds to pay the debt in whole or payment of the debt in installments plus percent of the tax and the relevant expenses within 10 days of the confiscation. Also, if the Tax Office intends to sell confiscated property if the taxpayer request, in equal condition, the priority of buying the confiscated property belongs to him/her.
In addition, the person who evades payment of debts and tax penalties may be banned from leaving the country by the authorities. Accordingly, the exit of tax debtors whose amount of definitive debt for legal entities holding a production license exceeds 20% of registered capital or five billion IRR, other legal entities and natural persons in the field of production exceeds 10% of registered capital or two billion IRR and other natural persons exceeds one hundred million IRR will be banned. It should be noted that this prohibition applies to the director or directors in charge of companies for the definitive tax liability of the legal person, whether taxable on the income of the legal person or taxes which are subject to deduction by the legal person under the rules relating to their tenure.
Finally, it should be noted that any protest from the taxpayer about enforcement proceedings must be commenced before the Tax Dispute Settlement Board, which is bound to deal with such complaint promptly. The verdict issued by the said Board shall be enforceable and binding.
Double Taxation Prevention
One of the concerns of businessmen and investors is the non-payment of double taxation both in their country of investment or trade and in their country of origin. Based on this situation, States for expanding and facilitating trade and investment between themselves, conclude double taxation prevention treaties and, subject to the foreseeable conditions, businessmen or investors under the treaty should pay tax only in one of those countries and no more. To this end, the Government of Iran has concluded international treaties on double taxation prevention with the following countries in order to expand trade and economic exchanges with foreign countries:
Bayan Emrooz Law Firm renders services to foreign and Iranian natural and legal entities in the field of tax law, including consulting, for setting up a Taxable contract. Having an experienced and specialized legal staff, Bayan Emrooz is ready to provide the needed legal services with respect to investment and taxes, and etc. in Iran.
Bayan Emrooz Law Firm was founded in 2008 under the registration No. 23211 in Tehran, and renders legal consultation and attorneyship services to foreign or domestic legal and natural persons. Our approach and main purpose is to expand the culture of utilizing legal consultation in civil and commercial matters in order to prevent high personal or social costs spent on resolution of disputes before judicial and non judicial authorities.