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Some Provisions Related to Article (197) of the Direct Taxes Act

Some Provisions Related to Article (197) of the Direct Taxes Act

Imposition of a Fine Amounting to 1% the Whole Contract Price in Case of Non-Submission of the Contract in Due Time


No.: 201-8432/60159

Date: January 13, 2003


Since it has been said that Tax Affairs Offices have faced some ambiguities regarding the rule of Article (197) of the Direct Taxes Act in respect of the imposition of a fine amounting to 1% the whole contract price in case of non-submission of the contract in due time to the respective Tax Affairs Office, so taking into account the investigations conducted, the INTA’s opinion about the topic in question is hereby communicated as follows in order to resolve the ambiguities and to adopt a unified procedure whereby any relevant tax authorities shall be required to act accordingly:

Since the Persian words “Peyman” and “Gharardad” [both meaning "contract"] are used interchangeably and since there exists no specific legal and logical reasons for the application of the said-above rule to only particular contract types such as contracts of construction or installation or the like from among various contract types, and as the Note (1) of Article (104) of the Direct Taxes Act passed in March 1988 and its subsequent amendments has not clearly stipulated any necessity for submitting a copy of the contract in all cases subject to Article (104) of the aforementioned Act and as it is typically seen that the Persian word “Peymankar” [meaning “contractor”] is employed for different contract types (whether contracts of construction, installation, transportation, etc.) on the basis of a mutual agreement between the two parties involved, so it is hereby made clear that the afore-mentioned 1% fine shall not be bound to contract works referred to in Article (99) or Article (107) of the Direct Taxes Act (or the Article (111) of the former text of the Direct Taxes Act) and that the aforesaid fine shall be claimed for all alternatives referred to in Article (104) of the aforementioned Act, in case the contact master refrains from sending a copy of the contract to the respective Tax Affairs Office.


                                               Isa Shahsavar Khojasteh

President of the Iranian National Tax Administration

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Administrative By-Law of Article (107) of the Amended Direct Taxes Act
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Bylaw of Paragraph (14) under Article (12) of the VAT Act
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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
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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