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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)

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)

 

The report No. 30/4-8576 dd. October 29, 1996 by the Head of the Tax Supreme Council addressed at the esteemed Deputy Minister of Tax Revenues, as referred to this Council by the aforementioned Deputy, was raised in the session of July 29, 1997 of the Plenary Board of the Supreme Tax Council. The aforementioned report focuses on the proposal of raising and reviewing some questions on the tax exemption in the free trade/industrial zones of the Islamic Republic of Iran and a possible exemption concerning the dissolution of legal persons where the most important issues are as follows:

  • Do the tax exemptions provided in the First chapter of the Fourth Title of the Direct Taxes Act passed in February 1988 and its subsequent amendment and also the tax exemptions provided in the Art. (13) of Law for the Management of Free Trade/Industrial Zones of the Islamic Republic of Iran apply in the computation of the income tax (i.e. the dissolution period tax) relevant to the last income tax period of legal persons who are dissolved within the tax exemption period? If legal persons involved in the free zones are exempted from the dissolution period tax described above, is this exemption applied also to their properties located outside the free zones?
  • As regards the holders of shares or holders of partners’ shares of legal persons involved in free trade/industrial zones or persons involved in free zones as real persons and are entitled to the exemption provided in Art. (13) of Law for the Management of Free Trade/Industrial Zones of the Islamic Republic of Iran, is the estate left from them located in free zones exempted from the inheritance tax as well?
  • Are the activities of companies partially or totally/directly or indirectly owned by the state, if engaged in free trade/industrial zones, subject to the exemption provided in the Art. (13) of Law for the Management of  Free Trade/Industrial Zones of the Islamic Republic of Iran?

On the strength of Para. (3) under Art. (255) of the Direct Taxes Act passed in 1987 and its subsequent amendment, the Plenary Board of the Supreme Tax Council put of the aforementioned issues under review and discussion and made the decision as follows:

Firstly, as for legal persons dissolved within the exemption period provided in the First Chapter of the Fourth Title of the Direct Taxes Act, the income derived from the exempted activities carried out in the last period before the dissolution shall be deducted from the taxable income of the aforesaid period and the residual, pursuant to relevant provisions, shall be subject to tax.

Secondly, taking into consideration the provisions of Art. (115) of the Direct Taxes Act passed in 1988 and the Note under it, on one hand, the base of computation of income tax for the last period of activity of dissolved persons consists of both the increased price of the assets and the outputs gained in that period and, on the other hand, the dissolution period tax has already been provisioned under the Chapter of Corporate Income Tax of Direct Taxes Act and has accordingly been categorized as an income tax; therefore, the tax exemption provided in the Art. (13) of Law for the Management of Free Trade/Industrial Zones of the Islamic Republic of Iran passed on August 28, 1993 shall not apply to those part of properties of the persons subject to provisions of Art. (13) of the said Law which are either located outside free zones or are irrelevant to the business activities stipulated in the afore-mentioned Art. (13) shall not be subject to tax exemption during the dissolution period.

Art. (13) of Law for the Management of Free Trade/Industrial Zones of the Islamic Republic of Iran provides the tax exemption for persons who are involved in investment or in any other economic activities within the area of such zones. Therefore, in case of the death of the aforesaid persons, it could be assumed that, in essence, it was the deceased persons, not their heirs, who had made investment or had carried out any economic activities; hence, merely on the fact that the inherited properties or financial rights are located in free trade/industrial zones, the heir shall not be able to take benefit from any tax exemptions in respect of the said properties and rights.

Art. (13) of Law for the Management of Free Trade/Industrial Zones of the Islamic Republic of Iran, as a special law, does not distinguish between private companies and companies partially or totally/directly or indirectly owned by the State; however, in respect of the government’s share, the companies shall not be deprived of the exemption provided in Article (13) of aforementioned Law. 

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