Summary of Principal Iranian Taxes:

The principal taxes in Iran are corporate and personal taxes on income. The Iranian tax law is formulated in a way to encourage investments in producing activities, mainly industry and mining. This is done through low tax rates and various facilities and exemptions.

Iran Tax Law on Profits and Other Income:

Profits of Iranian corporate entities are subject to Corporate Income Tax Law of The Direct Taxation Act of  1988  as  amended  on  May  1992. Personal profits and income are subject to the same act.

The Ministry of Economic Affairs & Finance and The Administration  of  Tax  Law:

The Ministry of Economic Affairs and Finance is the authority responsible for tax arrangements, including such national taxes as customs and excise duties. The assessment of taxable income is undertaken by district tax auditors who are, as defined by the above mentioned Act, competent authorities in respect to technical, specialized and administrative tax issues. 


The taxable income of all corporate  entities including local-foreign joint ventures is assessed on the basis of their book accounts.

Resident Companies:

Corporate income tax is assessed by way of deducting a “corporate tax” of 10% of the taxable income. The  remaining  90%  of  taxable   income is taxed   according  to the progressive income  tax  table  prescribed   in   the tax law:

amount of income
Rls (mil)
tax rate  
up to        1
excess     1  up to 2
excess     2  up to 4
excess     4  up to 9  
excess     9  up to 25 
excess    25 up to 50
excess    50 up to 100
excess   100 up to 300
excess   300

Non-Resident Companies:

   1.  In  the case of non-resident companies operating in Iran, whose income is earned through granting licences and concessions, the income tax is assessed at rates ranging from 20% to 45% (the above mentioned progressive table will apply to non-resident companies, on their part of taxable income):

 a)      in  the   case  where  a  government company is the party receiving such services from a non-resident company, 20% of the income  earned within a tax year is assessed as taxable income;

 b)      in  the   case  where  the  producing  unit is located in a deprived or semi deprived area, and provided that the activity in question  is not one of the tax exempted activities, 20% of the income earned in a tax year is assessed as taxable income;

 c)    in the case of  other   non-resident   companies   45%   of   their income earned in a tax year is assessed as taxable income

 2.  In the case of non-resident companies operating in Iran, whose income is earned through providing technical training and assistance the income  is   assessed  at   rates  ranging  from 20%  to 45% (the fore- mentioned progressive income tax table will apply on their part of taxable income):

a)     in cases where a government company is the party making payment, if at least 35% of the total income earned by a non-resident company  in a tax year is spent on salaries in Iran, 20% of the income earned in a tax year is assessed as taxable income, otherwise a rate of 30% will be applied;

b)    in cases where at least 35% of the total income earned in a tax year is spent on salaries in Iran, if the producing unit is located in a deprived or semi deprived area, 20% of the total income earned in a tax year is assessed as taxable income, otherwise a rate of 25% will be applied;

c)    in  cases  where  the amount spent on salaries in Iran is less than 35% of the total income earned in a tax year, if the producing unit is located in a deprived or semi deprived area, 35% of the income is assessed as taxable income and in the case of producing units located in other areas a rate of 40% will apply;

d)    in  the case of other companies, if the minimum amount spent on salaries in Iran is 35% of the total income earned in a tax year the taxable income is assessed at 35%, otherwise a rate of 45% will apply.

3.  The  taxable  income of contractual activities of companies or non-resident natural persons operating in Iran in relation to any operation concerning construction, technical installations, transportation, preparation of construction and installation drawings, surveying, supervising, and technical calculations is assessed at a rate of 12% of their annual income.


Resident and non-resident companies are subject to municipal tax at a rate of 3% of their taxable income. Governmental companies and individuals’ salaries are an exception to this rule.


General Rule:

Allowable deductions include all expenses directly connected with the conduct of the business. These expenses mainly include: the price of purchased goods or the price of consumer goods used as part of sold goods and services, personnel expenses, rent, rented equipment, overhead expenses, insurance premiums, expenses related to research, testing and training, compensations, transportation, unsuccessful mining exploitations, losses arising from exchange of currency, auditing and administrative expenses and others.


Generally, all assets owned or used by a company for the purpose of its trade are depreciable, whether tangible or intangible, new or used, if their values necessarily diminish with time or by usage. Depreciation is calculated on the first day the asset is made available for use by the entity. Establishment expenses such as registration fees and consultancy fees are depreciable upto a maximum period of 10 years. The depreciation rates are indicated in the depreciation table which is prepared by the Ministry of Economic Affairs and Finance and approved by the Council of Ministers.

Depending on the case, the calculation method could be straight-line or declining-balance. Overall, expenses arising before the exploitation period is depreciable upto a maximum period of ten years starting from the exploitation date.

Textile & Clothing Ind.    8   years
Plastic Ind.                10 years
Pharmaceutical, Health & Medical Ind. 8-10 years
Printing & Copying & Graver Ind.10% or 100%
Construction Materials Ind.10 years
Glass Ware Ind.            8 or 10
Cement Ind.            10 years
Food & Beverage Ind.8 & 10 years
Chemical Ind.        6,8,10 or 15 years
Oil & petrochemical Ind.10 years
Cellulose & Wood Ind.  10 or 12 years
Paper & Pulp Ind.          10 years
Electricity & Electronic Ind.8 or 10 years
Household Ind.     8 or 10 years
Lastic, Tyre & Tube Ind.10 years
Leather & Shoe Ind.           10 years  
Telecommunication Ind.8 years
Steel & Steel Mill Ind.8%-15%
Water & Sewage Ind.10 or 15 years
Agriculture & Animal Husbandry Ind.8 or 10 years or 30%
Tractor & Combine Manufacturing Ind.10 years
Cinema & Film Ind.10 years
Paint & Adhesive Ind.10 years
Motor Vehicles15%-35%
Road & Construction Machinery25%
Tools & Equipment100%
Mining Machinery2-5 years
Workshop Buildings & Factory, Resident Buildings7%-10%
Office Equipment10 years

Tax Free Reserves:

Contributions made to pension schemes, the social security organization, insurance companies and amounts up to 10% of annual payments saves for pension, retirement, compensation given on dismissals and repurchasing of employee services are considered tax free reserves provided that:

a)  such reserves are kept under the supervision of The Ministry of Economic Affairs and Finance;

b)  such amounts are kept within a separate account with an Iranian Bank, and

c)  the reserve is not used for purposes other than those prescribed by the law.


Expenses related to compensation of damages incurred upon the assets and activities of an entity are considered as allowable deductions provided that:

a)   there is adequate evidence for its certainty;

b)   its nature and amount is specified and that;

c)   a second party is not liable for its compensation.


Income arising during the course of liquidation and dissolution is subject to corporate income tax at the normal rates, so that capital gains arising on the disposal of fixed assets are added to taxable income in the normal manner.


Government incentives on taxation are available to investors as a range of chronological exemptions on priority producing activities.

Housing Projects:

The income resulting from low and medium cost housing projects, subject to the actual transfer of ownership, is fully tax exempted provided that the criteria prescribed  by The Ministry of Housing, and Economic Affairs & Finance are met.

Agricultural Activities:

The income resulting from agricultural, husbandry, forestry, bee keeping activities and the like are fully tax exempted.

Producing and Mining Activities:

A.  The income earned by producing and mining units upon the permission obtained from the relevant ministries and subject to priorities    prescribed as (1), (2) & (3) will enjoy tax exemption for 8, 6 and 4 years respectively, provided that they are located outside the 120km radius of Tehran and 50km radius of Isfahan. As an advantage to Iran-foreign company joint ventures the minimum exemption period will be 6 years. The list of  priority projects is prepared and made available  by the government at the beginning of each 5 year development plan.

B.  Moreover, the producing and mining units located in less developed areas enjoy an additional extension equal to half amount  of the exempt period. For example a priority 1 pharmaceutical project will enjoy an 8 year tax exemption if located outside the 50km radius of Isfahan, but if located in a less developed area such as Hashtroud ( a town in East Azerbaijan Province) it will enjoy  (8-2=4 , 8+4=12) a 12 year tax exemption period.

The list of less developed areas is prepared by the Plan and Budget Organization at the beginning  of each 5 year development plan.

C. 20% of the declared taxable income resulting from producing, mining, design and engineering, and design and assembly activities is tax exempted provided that the related exploitation permit is acquired.

D. The declared profit resulting from industrial and mining activities appropriated for the renovation, expansion, completion of existing industrial and mining units and/or being reserved for setting up new industrial and mining units is tax exempt.

E. 100% of income resulting from the export of finished industrial goods, agricultural products, and the related convertible & supplementary industry products and 50% of  income  resulting from export of other goods and commodities intended for promoting the export of non-oil commodities are tax exempt. The list of tax exempt products is suggested by the Ministries of Economic Affairs & Finance, Commerce, Agriculture, Construction, and Industry during each development plan and approved by the Council of Ministers.

F. 100% of income resulting from transited commodities through Iran is tax exempt provided that no modification is made to the nature of the commodity(s) in question.

G. Companies with  enlisted shares on the stock exchange are exempted from 10% corporate income tax, provided that the related equity transactions are registered by the stock exchange agents.

Moreover, the dividend allocated or paid to shareholders is tax exempt provided that:

a) the share of the company are enlisted;

b) the shareholder’ share of equity is less than 5%;

c) the number of shareholders within the company is not less than 100.

H.  All tourist institution, agencies, hotels etc. which have obtained the related permit from the Ministry of Culture and Islamic Guidance are exempted from 50% of their annual tax (5 star hotel are an exception to this rule).


For a corporate entity the tax year is defined as an Iranian year starting from 1st of Farvardin (21st of March) and ending on the last day of Isfand (20th of March).
However, in the case of legal entities with different financial year it is possible  to assume their financial year as the basis for tax assessment. The deadline for submitting the returns and accounting records is 4 months after the end of the financial year.


An annual return must be filed, usually within four months of the close of  the   preceding   financial   year. On those returns which are submitted and paid within the legal time an amount equal to 4% of the payable tax is deducted as “good pay prize”. In cases where accounting records have not been kept according to the prescribed regulations an estimated assessment is  issued.  In   this   even  it is on the taxpayer to  provide sufficient proof that the amount so assessed is excessive.

Assessments are issued every year within 12 months after the deadline for submitting returns. Objections to the assessment could be made within one month after the receipt of the official notice. If the documents presented by the taxpayer are accepted and approved, final agreement could be reached with the head tax auditor. Otherwise, the case is referred to The Initial Board of Tax Disputes for further investigation. Taxpayers with   approved   accounting   records   who  have, in three  consecutive years, paid their due tax without referring  to The Initial Board of Tax Disputes will enjoy a “good pay prize” on their credit tax account equal to 5% of the total 3 year tax amount. In case the taxpayer again has objection the case may be referred to the High Council for Tax Affairs.


Tax or fiscal audits of companies and businesses are undertaken periodically by district tax auditors.

Sample  Calculation  of  Corporate  Income  Tax


Taxable  income  of hypothetical  producing   joint  venture   company is  Rls.2,000,000,000  after  allowable   deductions. The shareholding  ratio   is  40%  foreign  and  60%  Iranian.

25%  of  the  income  derived  from exports  (tax  exempted)  
20%  of  the  income  reserved  for  expansion  (tax  exempted)

Total  income                                                                            

            less:            25%   income  from  exports  exempted :  Rls. 2,000,000,000  
            less:   20%  income  for  expansion  exempted : Rls.    500,000,000

Calculation  of  foreign  share  according   to  income  tax  schedule
(Art. 131  amended )

Taxable Income ( Rls.)Tax  Rate (%)Tax  Amount (Rls.)
First    1,000,00012       120,000
Next    1,500,00018       270,000
Next    1,500,00025       375,000
Next    5,000,00035    1,750,000
Next  16,000,00040    6,400,000
Next  25,000,00045  11,250,000
Next  50,000,00050  25,000,000
Next  96,000,00054  51,000,000
 396,000,000 201,005,000
Tax  payable  by  the  J.V.C.
10%  corporate  tax Rls. 110,000,000
Tax  on  income  of  foreign  ShareRls. 201,005,000
Tax  on  income of  Iranian  ShareRls. 307,925,000
3% Municipal  Surtax         33,000,000
Total Rls.  651,930,000
Total  tax % of  total profit 32.60%
Tax  payable by  the foreign shareholder
10% corporate  tax (40%  shares) Rls.   44,000,000
Tax  on  incomeRls. 201,005,000
3%  Municipal  surtax  (40%  shares)Rls.   13,000,000
Tax % of  total  foreign   profit 32.28%
 Rls. 400,000,000 
Total exemptionRls. 900,000,000 
Taxable  income  less exemptionsRls. 1,100,000,000
         Less:  10%  corporate  tax
Rls. 110,000,000
Dividends  payableRls.    990,000,000
40%   foreign shareholdersRls.    396,000,000
60%  Iranian  shareholders Rls.    596,000,000

Priority  Activities  Enjoying  Tax  Exemption
in  the  Iranian  Mainland

( Annex  to  Article  132 of  the  Direct  Taxation Act.)
Table  one ( 8  years   Tax   Exemption )

No.     ICGS CodeField  of  Activity
1      3112-000Dairy  Products *
2      3116-000Flour   Mill
3      3411-000Production of  Paper  Pulp, Paper, Pasteboard  Carton
4      3420-000Production of  Publishing  &  printing  Related  Industries
5      3522-000Pharmaceutical  Products
6      3710-0001 
7      3710-0002Steel & Iron  Forging
8      3710-0004Steel & Iron  Casting
9      3710-0013Production  of  Rails
10     3710-0014Production  of  Steel  Bars
11     3710-0101Production  of  Cast   Iron  Ingots
12     3710-0110Production  of  Steel  and  Ferro  Alloys
13     3710-0111Production  of  Ferro – Manganese
14     3710-0112Production  of  Ferro – Silicon
15     3710-0113Production  of  Ferro – Chromium
16     3710-0114Production  of  Ferro – Nickel
17     3710-0115Production  of  other  Iron   Alloys
18     3710-0150Iron    Powder
19     3710-0151Steel  Powder
20     3710-0152Production  of  Sponge  Iron
21     3710-0153Production  of  Sponge  Steel
22     3710-0160Iron  ore  Pellets
23     3710-0161Steel  Pellets
24     3710-0162Production  of  Iron  Ingots
25     3710-0163Production  of  Steel  Ingots
26     3710-0170Production  of  Large  Iron  Ingots
27     3710-0171Production  of  Large  Steel  Ingots

 Industries  under  this   code,  as  below, do not  enjoy  Tax  Exemption:

Prod  of  Ice Cream3112-0001Water-ice  Cream3112-0174
Dif  Kinds of  Ice Cream3112-1710Cacao  Milk Shake3112-0175
Fruit  Ice  Cream3112-0172Strawberry Milk Shake3112-0176
Chocolate  Ice  Cream3112-0173Banana  Milk Shake3112-0177
No. ICGSField  of  Activity
28     3710-0172Production  of  Small  Iron  Ingots
29     3710-0173Production  of  Small  Steel  Ingots
30     3710-0174Production  of  Iron Stabs
31     3710-0175Production  of  Steel  Slabs
32     3720-0101Copper  Matte
33     3720-0104Copper  for  Refining
34     3720-0105Crude  Ingots
35     3720-0106Refined  Copper
36     3720-0107Copper  Ingots
37     3814-0842Hey  Shredding  Machines
38     3821-0000Production  of  Motors & Turbines
39     3822-0000Production  of  Agricultural  Equipments  & Machinery
40     3823-0000Production  of  Machinery for  Wood & Metal  Working
41     3824-0000Production  of  other  types  of  Machinery ( than  a.m. 40)
42     3841-0000Production  &  Repair  of  Sea  Vessels  ( Ship  Building )
43     3845-0000Aircrafts  Manufacturing
44     3511-0000Production of  Basic  Chemicals ( other than Fertilizers)
45     3512-0000Production of  Fertilizers  and  Agricultural  Insecticide
46     3513-0001Production of  Synthetic  Fibers
47     3551-0000Production of  Tires  & Tubes
48     3851-0000Production of  Professional, Scientific  and  Measurement  Instrumentation  and  Control  Equipments
49     3831-0000Production of  Industrial  Equipment
50     3117-0001Production  of  Bakery  Equipment
51     3114-0000Processing & Preserving of  Fish  and  other Sea  Foods
52     3115-0000Production  of Edible  Oils  &  Fats
53     3117-0111Baby  Foods – Special  Products  for  Children
54     3825-0000Production  of  Office  &  Computing  Machinery
55     3832-0000Complete  Communication  Machinery  &  Equipment
56     3720-0005Aluminum  Casting
57     3720-0006Brass  Casting
58     3720-0007Lead  Casting
59     3720-0008Copper  Casting
60     3710-0009Cast  Ironing
61     2301-0000Iron  Ore  Mining
62     2302-0000Non- Ferro  Ores  Mining
63     2901-0130Refractory
64     2100-0000Coal  Mining
65     2901-0120Kaolin

Table  Two  (6  Years  Tax  Exemption )  

No.     ICGS  CodeField  of  Activity
1      3118-0000  Production  &  Refining  of  Sugar
2      3122-0000Production of  Cattle  &  Poultry  Food
3      3211-0000Textile  Industries
4      3215-0000Cord  Industry
5      3231-0000Leather  Industry
6      3240-0000Shoe  Production  other than  Plastic and  Rubber  one
7      3311-0010Production of  Chip- Board
8      3513-0002Production of  Solid  &  Liquid  Resins
9      3513-0003Production of  PVC Materials
10    3530-0000Refined  Products
11    3540-0000Products  derived from  Petroleum  and  Coal, Flues Tars, and  Solvents
12    3620-0000Production of  Glass  & Glass  Products
13     3692-0002Production of Cement
14     3832-0000Production of Mass  Media  Equipment
15     3833-0000Production of Household  Electrical  Devices
16     3839-0000Production of other  Electrical  Equipments
17     3852-0000Production of Visual & Photographic  Equipment
18     3710-0007Metal  Roll  Milling
19     3710-0012Production of Iron Beams
20     3710-0015Production of Angle  Profiles
21     3710-0016Production of  Steel  Tubes  &  Pipes
22     3710-0100Production of Spiegel  Cast   Iron
23     3710-0102Production of  other  Cast  Irons
24     3710-0140Production of  Iron Granular
25     3710-0141Production of Steel  Granular
26     3710-0176Production of  Iron  Steel & Iron  Ingots
27     3710-0180Production of  Semi – Finished  Iron  Coil  Products
28     3710-0181Production of  Semi – Finished  Steel   Coil  Products
29     3710-0190Production of  Wide  Iron  Strips
30     3710-0191Production of  Wide  Steel  Steps
31     3819-1562Food  Aluminum  Cans
32     3809-0192Iron  Cans
33     3819-0030Production of  Metal  Cans
34     3819-0032Production of  Gas  Cylinders
35     3819-0594Aleppo  Cans
36     3819-0193Steel  Cans
37     3819-01951 Kg  Cans
38     3819-01961/2  Kg  Cans
39     3412-0006Production  of  Pasteboard  Boxes
40     3412-0155Pasteboard  Cans
41     3412-0156Pasteboard  Barrels
42     3819-1561Special  Aluminum  Cans for  Poison  Packaging/Transport
43     3819-1563Aluminum  Casks
44     3819-1564Aluminum Barrels
45     3819-1565Aluminum Large  Cans
46     3819-1566Aluminum  Tubes
47     3819-1580Aluminum  Utensils  for  Compressed  Gas
48     3819-2140Iron / Steel  Lids  for  food  Utensils  of  Glass
49     3819-2141Iron/ Steel  Lids  for  Glass  Bottles  of  Non-Alcoholic Drinks
50     3560-0569Plastic  Pharmaceutical   Utensils
51     3412-0153Pasteboard  Boxes
52     3819-1691Aluminum  Lid  for  Glass  Bottles

Table  three
( List  of  Producing  Activities  Excluded
from  the  Third  Priority  of  Tax   Exemption )

No.ICGS  CodeField  of  Activity
13119-0002Production  of  Chewing – gum
23112-0001Production of  Ice  Cream
33116-0002Rice  mill
43134-0102Production of ( Non – Alcoholic )  Drinks
53119-0239Production of any  kind of  Sweets
63117-0125 3117-0115 3121-0007Production of  any  kind  of  Chips  and salty  Cracker and  salty  pea – shooter  and  similar  goods
73523-0015Production of  Cosmetics
82523-0001 2523-0003Production  of  any  kind   of  Air  Fresheners
93522-0007Production  of  Polish
103529-0006Production  of Candles
113320-0100Production  of Furniture
123111-0431 3311-0441Production  of  Doors, Windows  &  Decorations
133813-0121 3813-0010Production  of any  kind  of  Blinds
143211-1541 3233-0010Production of  Blind – Stripes  &  Safety  Belts
153411-0440Production  of  Wall – Papers  &  design
16ServicesExpress  Washings
17ServicesCar  Washing & Transportation  Means  Services
193902-0000Music  Instruments
203909-1280 3909-1283Production  of  and  kind  of  Cigarette  Lighters
213819-0851 3620-0404Production of  Luster
223121-0004Production of  Coffee  &  Cocoa
233220-1000Production of  Hats