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Resolving Obscurities regarding the Procedure on How to Apply the VAT and Excise Duties in Free Industrial/Trade and Special Economic Zones

Resolving Obscurities regarding the Procedure on How to Apply the VAT and Excise Duties in Free “Industrial/Trade” and “Special Economic” Zones

No. 200/94/47

Date: August 1, 2015

Since some obscurities have been raised on how to implement the Paragraph (1) of the Circular Letter No. 54409 dated August 17, 2009 whereby the exchange of goods and services between persons and business enterprises resident in the free “industrial/trade” and “special economic” zones shall not be subject to the VAT and excise duties stipulated in the VAT Act within the afore-mentioned zones, therefore,  in order to resolve any obscurities and adopt a uniform procedure, it is hereby provided that:

Since the persons resident in the afore-mentioned zones involved in the supply of goods or provision of services subject to the VAT Act shall not be considered, within such zones, as taxpayers required to VAT registration and  implementation and shall not be not obliged to apply the provisions of the said-above Act including claiming and collecting the VAT and excise duties from the purchasers within the area of free “industrial/trade” and “special economic” zones, thus, the business enterprises resident in such zones, in the case of supply of goods and provision of services within such zones, regardless of the purchaser’s place of residence, shall not have any obligations regarding the claim and collection of the VAT and excise duties. Furthermore, the goods produced and processed in free “industrial/trade” and “special economic” zones, which are considered as domestic production as per relevant provisions, shall be subject to the VAT and excise duties, if they enter into the main country’s customs territory. It is also mentionable that as regards the importation of goods from the afore-mentioned zones to the main country’s customs territory, whether the goods are imported by the purchaser or seller and regardless of their being or not being subject to the importation duties, the Customs Administration of the Islamic Republic of Iran shall be obliged, pursuant to the provisions of Note (1) under Article (20) of the VAT Act and taking into consideration the provisions of Article (15) of the same Act, to collect the VAT and excise duties at the due legal rate.

Iranian National Tax Administration

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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
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Letter of Circular regarding the Tax Exemption in Free Trade/Industrial Zones
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Resolutions Made by the Tax Supreme Council regarding Tax Exemption in Free Zones
Some Provisions Related to Article (197) of the Direct Taxes Act
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Tax-Related Provisions of 1395 (2016) Annual State Public Budget
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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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