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Administrative By-Law of Note (3) under Article (169) of Amended Direct Taxes Act approved on July 22, 2015

Islamic Republic of Iran

Ministry of Economic Affairs and Finance

Minister’s Office

 

Reg. No.: 200/3949/46378

Reg. Date: June 7, 2016

 

In the Name of God

Upon the proposal made by the Iranian National Tax Administration (INTA) on May 21, 2016 under the No. 200/3193 and on the strength of Note (3) under Article (169) of Direct Taxes Act approved on July 22, 2015, Minister of Economic Affairs and Finance approved as follows the Administrative By-Law of the aforementioned Note:

 

Administrative By-Law of Note (3) under Article (169) of Amended Direct Taxes Act approved on July 22, 2015

 

Chapter One: Definitions

Article (1):

In this By-law, the following terms shall refer to:

  1. Administration: The Iranian National Tax Administration (INTA).
  2.  Act: Direct Taxes Act and its subsequent amendments. 
  3. Legal Persons: Any persons who are known as legal persons as per relevant laws and regulations. For the purposes of this By-law, the administrative organizations referred to in Article (5) of the Law for Management of State Services shall be considered as legal person. 
  4. Owners of [individual] Business: All real persons subject to the provisions of Chapter IV of Title C of the Act.
  5. Tax Identification Number (TIN): A unique number the Iranian National Tax Administration (INTA) may devote, as the case may require, to legal persons or owners of individual businesses.
  6. Registration System: An electronic system which is developed by the Administration for the registration of taxpayers.
  7. Transactions System: An electronic system which is developed, for the purpose of implementation of the present By-Law, by the Administration in order for the liable persons to meet their obligations in sending the list of their transactions.
  8. Transactions: Any types of activities, whether trade or non-trade, leading to the purchase of goods and services and assets or the acquisition of income for the sale of goods and assets or for the offer of services to legal persons and owners of business subject to the Act.
  9. List of Transactions: A report including the information items related to the purchase and sale of goods and services.
  10. Invoice: Invoices which are in conformity with the forms defined in the Administrative By-Law of Article (95) of the Act.
  11. Registration: The registration of information in regard with the taxpayers’ identity, location, and business licenses in the [electronic] systems in order to issue TIN.
  12. Ultimate Consumer: An individual who buys the goods and services for personal purposes according to his needs and does not use them for delivery of goods and services to others.
  13.  Civil Partnership Code: An identification number allocated by the Administration to individual owners of unincorporated businesses which are run through civil partnerships.
  14. Business Card: A card including at least the taxpayer’s name and TIN which is issued by the Administration to be allocated, if needed, to legal persons or owners of individual businesses.
  15. Foreign Persons’ TIN: A unique number allocated to foreign subjects as per relevant regulations.

 

Chapter Two: Registration in the Tax System

Article (2):

Legal persons or owners of individual businesses subject to the Act shall be obliged to register in the state tax system observing the provisions and regulations stipulated in this By-Law in a way to be announced by the Administration.

Note: Previous Calls for Registration already made by the Administration up to the end of 1395 (i.e. March 19, 2016) shall still be valid.

 

Article (3):

Owners of individual businesses who are obliged to register in the tax system shall be required to make separate registrations for any enterprises or locations.

Note (1): If owners of individual businesses subject to this By-Law have more than one business location for the same license as per authorizations issued by relevant authorities, then only one single registration shall be made for all those locations whereby, upon the decision to be mad by the taxpayer, one of those places shall be specified as the principal business location and other places shall be considered as branches. If the taxpayer does not choose the principal business location, then the Administration shall make that choice.

Note (2): If owners of businesses subject to this By-Law are engaged in more than one business activity at one single location, then they shall be obliged to make one single registration for all business activities run at the location in question.

Note (3): In case of workshops and production enterprises for which the type of business activity requires establishing office(s) or shop(s) at one or more locations other than the workshop or the production site, the taxpayer may make one single registration for all those locations for the address he announces as his main business location and file one single tax return for all incomes derived from his business activities. For such a taxpayer, only one tax file for the address he announces shall be opened.

 

Article (4):

Business enterprises, which are run as civil partnerships, whether obligatory or optional, shall be registered in the tax system as one single taxpayer. Owners of such businesses shall be obliged, at the time of registration, to announce the required information of all their partners as well as the share of each partner.

 

Article (5):

Those subject to registration shall be obliged to inform the Administration, within two months from the date of occurrence, of any changes including liquidation, closure of business activity [whether permanents or transient (i.e. suspension)], change of [trade] name, change of type of business, change of the address, conversion of an individual business activity into a partnership or the vise versa, change of partners (whether obligatory or optional) and any other changes.

 

Article (6):

Upon the completion of registration of taxpayers with tax system, the Administration shall be required to allocate to them TIN numbers and to issue to them Business Cards.

 

Article (7):

Owners of individual businesses and legal persons, as long as they have not been provided with new TIN numbers, are obliged to use in their transactions their individual national ID number, corporate national ID number, civil partnership ID number and foreign persons’ unique number (FIDA Code), whichever the case.

 

Chapter Three: How to issue invoice and use TIN

Article (8):

Legal persons and owners of individual businesses subject to the Act shall be obliged to issue invoices for the sale of goods and supply of services and insert their own TIN and that of the purchaser on invoices, contracts and other similar documents.

Note: If the purchaser of goods, services or properties is not obliged to register with the tax system or is a real person final consumer and/or is a real person subject to the provisions of Article (81) of the Act (engaged in such activities as agriculture, animal rearing, stockbreeding, fish farming, bee-keeping, poultry husbandry, hunting and fishing, sericulture, revival of pastures and forests, horticulture of any type and palm trees), then the shall be no need for the inclusion of the purchaser’s TIN on the invoice so issued.

 

Chapter Four:

Taxpayers’ obligations in regard with sending the list of their transactions

Article (9):

The following persons shall be subject to the provisions for sending the lists of transactions:

  1. All legal persons;
  2. Owners of individual businesses which are classified as Group One activities under Article (2) of Administrative By-Law of Article (95) of the Act; and
  3. Owners of individual businesses subject to the implementation of the VAT Act.

Note: List of persons subject to this Article may be changed upon the Iranian National Tax Administration (INTA) and the approval of the Minister of Economic Affairs and Finance.

 

Article (10):

Persons subject to Article (9) of this By-Law shall be required to prepare and send the list of their transactions in conformity with the information items included in the Transactions Database. The list of transactions shall be prepared for periods of three months (quarterly) to be electronically sent to the Transactions Database through the internet portal of the Administration or be delivered to the relevant Tax Affairs Office in the form of a CD including the information requested by the Administration. If the end of a legal person’s fiscal year is during one of the seasons of the Iranian solar calendar, then such persons shall be obliged to prepare and send two copies of their transactions list for that particular season, one for the period between the beginning of the season in question and end of their fiscal year and the other for the period from the beginning of the fiscal year to the end of that particular season.

Note (1): The Administration may require certain persons to send separate transactions lists for different invoices to the Transactions Database through the internet portal of the Administration.

Note (2): If transactions are made in foreign exchanges, there shall be an obligation for the inclusion of the amounts paid in foreign exchanges, type of the foreign exchange, rate of equivalence (of the exchange used for the transaction), and the equivalent amount in the Iranian Rials in invoices and income documents to be issued and in the list of transactions to be sent.

Note (3): If necessary, the Administration may, upon the approval of the Minister of Economic Affairs and Finance, increase the time limit for the reception of information or change the way of receiving the information.

 

Article (11):

Those who are liable to the obligation for sending the list of transactions they have made for the purchase of goods, services or properties, whether they are real persons subject to the provisions of Article (81) of the Act (engaged in such activities as agriculture, animal rearing, stockbreeding, fish farming, bee-keeping, poultry husbandry, hunting and fishing, sericulture, revival of pastures and forests, horticulture of any type and palm trees) or they are legal persons not required to register with the tax system, shall not be obliged to insert the sellers’ TIN on the transaction list they are assumed to send to the Administration and shall be allowed to declare such purchases merely by reporting the total amount thereof.

 

Article (12):

In sending the information of import and export of goods and services, there shall be an obligation for the inclusion of customs declaration registration number, Customs Code of the clearance agent, and foreign persons’ unique number (FIDA Code), whichever the case.

 

Chapter Five: Cases not-liable of the obligation for sending the transactions list

Article (13):

The following cases shall not be subject to the obligation for sending the transactions list:

  • trading the securities and their interests;
  • trading the shares and partners’ shares and their priority rights;
  • interests and fines received by banks, Cooperatives Fund, the funds for supporting the agricultural sector, licensed non-banking credit institutions and Gharz-ol Hasanah (Islamic interest-free loan) funds;
  • dividends on the shares and partners’ shares;
  • membership fees paid by members of professional societies, parties, associations, and NGOs licensed by competent authorities;
  • gratuitous donations, rewards and gifts;
  • amounts paid to administrative organizations under the title of fines or damage compensation, different types of duties and taxes (except for taxes collected under Direct Taxes Act and VAT Act), registration fees, stamp duties, customs duties and similar levies;
  • salaries and wages paid pursuant to the provisions of Chapter III of Title C of Direct Taxes Act; and
  • amounts paid as building maintenance charges of the business activity location as well as amounts paid as subscriptions.

 

Chapter Six: Other provisions

Article (14):

In invoices issued for purchasing from real persons up to 5% of the quorum of small transactions pursuant to Note (1) under Article (3) of the Law for Holding Tenders, there shall be no obligation for the inclusion of the seller’s TIN in the purchase list. The buyers shall be required to insert the information of such purchases on the purchase transaction list under the title “transactions amounting less than 5% of the quorum” to be sent to the Administration.

 

Article (15):

The procedure for sending and receiving the information of confidential transactions will be prepared, taking into account the status of the sender and the nature of the information to be sent, by the relevant administrative organization to be approved by the Administration.

 

Article (16):

For those persons who take measures, within the framework of the By-Law pursuant to Note (5) under Article (169-bis) of the Act, to send the information of their transactions, there shall be no further obligation for re-sending the same information in line with the provisions of the present By-Law or other relevant directives.

 

Article (17):

In the following cases, the TIN number shall become void:

  • death of real person;
  • announcement of the termination of business activity by real persons;
  • liquidation of incorporated legal persons upon the completion of clearance operation and the announcement of the termination of the settlement process and for other types of legal persons, the cancelation of their activity license; and
  • Issuance of verdicts by judicial authorities in regard with the cancellation of TINs.

 

Article (18):

Failure to observe the regulations provided in the present By-Law and relevant directives shall be subject to penalties stipulated in the Act. The rule of this provision shall not prevent from the application of other relevant laws.  

 

Article (19):

Failure to undertake any of the obligations referred to in Article 169 of the Act shall be subject to the penalties provisioned in that Article as follows; such penalties shall be collectible within the time limit provided by Article (157) of the Act:

Row

Description of the Fault

Penalty Rate

Basis for Computing the Penalty

1

Failure to issue invoice for the sale of goods or provision of services

2%

Price of the transaction

2

Failure to include one’s TIN

2%

Price of the transaction

3

Failure to include other transaction party’s TIN

2%

Price of the transaction

4

Using one’s TIN for others’ transactions

2%

Price of the transaction

5

Using others’ TIN for one’s transaction

2%

Price of the transaction

6

Failure to send the transactions list to the Administration in prescribed ways

1%

Price of transactions for which the relevant list has not been sent

 

Note: In cases of the faults listed in rows (1) to (3) of the above table for any given transaction, the computable penalty shall be 2% of the price of the same transaction at maximum.

 

This By-Law is hereby approved in seven Chapters, nineteen Articles and eleven Notes pursuant to the provisions of Note (3) under Article (169) of Direct Taxes Act approved on July 22, 2015 upon the proposal made by the Iranian National Tax Administration and shall be applicable as of March 20, 2016. The procedure for the submission of transactions by persons subject to this By-Law for semesters Spring and Summer of the year 1395 (i.e. March 20, 2016 – March 21, 2017) shall still be in accordance with the previous regulations and directives issued by the Iranian National Tax Administration.

 

                          Signed:

                                   Ali Tayyebnia, Minister of Economic Affairs & Finance

Related Pages
A Summary of the Address Instruction on the Issuance of Invoices Pursuant to Article 19 of the VAT Act
Administrative By-Law of Article (107) of the Amended Direct Taxes Act
Allow ability of the Interests Paid for the Issuance and Sale of Cooperation Bonds
Bylaw of Paragraph (14) under Article (12) of the VAT Act
Currency Exchange for the Taxpayers with Foreign-Currency Transactions and Foreign-Currency Debts
Extension of the Rule of Note (2) under Article (119) of the Fifth Five-Year Development Plan of I.R.I to Those Entitled to the Tax Exemption Provided in Art. (13) of Law for the Management of Free Trade/Industrial Zones
Letter of Circular on Salary Income Annual Allowance for 1395 (2016)
Letter of Circular regarding the Tax Exemption in Free Trade/Industrial Zones
New Directive Regarding the Prevention from the Exit from the Country
Procedure for the VAT Treatment of Chain Store Companies
Procedure on How to Apply the VAT and Excise Duties in Free Industrial/Trade and Special Economic Zones
Resolutions Made by the Tax Supreme Council regarding Tax Exemption in Free Zones
Resolving Obscurities regarding the Procedure on How to Apply the VAT and Excise Duties in Free Industrial/Trade and Special Economic Zones
Some Provisions Related to Article (197) of the Direct Taxes Act
Starting Point of Calculating the Fines Pursuant to Article (190) of Direct Taxes Act on Understated Incomes (Adjusted Tax)
Tax-Related Provisions of 1395 (2016) Annual State Public Budget
Tax-related provisions of the Law for Removing Obstacles to Competitive Production and Promoting the Country's Financial System
The Exemption of the Profits Derived from Currency Exchange in the Economic Activities Carried Out in Trade/Industrial Free Zones
The Resolution No.: 30/4-5586 Date: June 12, 1995 (issued by the Plenary Board of the Supreme Tax Council on the Tax Exemption of Free Zones)
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