Accounting and tax

1. In Iran, resident companies will pay corporate tax at the standard rate of 25%;
2. All Iranian resident companies must register for VAT which will be paid quarterly at 4%. VAT returns must be submitted by the 15^th of the month after the end of the 3-month period;
3. The Iran Direct Taxation Act mandates all resident businesses to be registered for corporate tax and VAT at the Iranian National Tax Administration (INTA);
4. Capital gains arising from i) sale of shares of a publically listed company and ii) real estate transactions are tax exempt. All other transactions resulting in capital gains will be taxed at 25%;
5. There is no withholding tax levied on dividends in Iran. However, corporate tax of 25% will be levied on dividends received from non-resident companies;
6. Interest payments and royalty payments to non-resident businesses and individuals will be subject to withholding tax of 5%;
7. In Iran, all resident companies can carry forward their business losses indefinitely;
8. Resident companies must file their tax returns within 4 months after the end of the fiscal year. Please note, monetary penalties of 2.5% per month will be imposed for late filing;
9. Companies will also be required to pay property taxes annually at an average rate of 5% on real estate. When real estate is sold, transfer tax of 5% (stamp duty) will be levied on the real value of property in Iran;
10. Stamp duty of 0.2% will be payable i) on the issuance of shares for public companies and ii) on initial share capital for private companies. Also, a 4% tax will be payable on the sale of shares;
11. Each foreign individual and legal entity needs to obtain an National ID and Economic Code to be included in the corporate structure of an Iranian legal entity;
12. Iran has signed DTAs with 42 countries including China, France, Germany, South Africa and Spain to reduce withholding tax on payments abroad;
13. Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budgets and sensitivity analysis.
14. For an active trading company, the Healy Consultants’ fees to efficiently and effectively discharge our Client’s annual company accounting, auditing and tax obligations is €2,300. Following receipt of a set of draft accounting numbers from our Client’s company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants’ fee is only €950;
15. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

1. An Iranian private joint stock company can be setup with at least 2 directors and 3 shareholders, who can be of any nationality. Please note that while corporate entities can act as shareholders, they cannot be appointed as company directors;
2. Branch offices and representative offices must appoint a legal representative for their company. The legal representative can be an individual or a corporate body and needs not be resident in Iran;
3. Monthly, quarterly and mid-year Government tax obligations include i) monthly payroll reporting and ii) quarterly VAT and corporation tax return filing. If you need our help, Healy Consultants can complete monthly Government reporting for a monthly fee of €1,600. Healy Consultants monthly support will include i) receive in dropbox the monthly invoices from our client ii) label monthly bank statement transactions iii) preparation and submission of VAT returns and iv) monitor monthly profit levels to minimize annual tax v) submission of monthly employee payroll reporting;
4. All public companies must submit audited financial statements to the authorities. However, private companies will only be required to get an audit if i) their annual revenue is higher than €1,000,000 or ii) total assets are higher than €2,000,000;
5. All resident companies must have hired at least 3 local employees, before they can hire non-Iranian nationals;
6. All employers must make an unemployment contribution to the Government worth 3% of the employee’s salary;
7. 8 hour work days are observed from Sunday to Wednesday along with a 4 hour work day on Thursday. Friday and Saturday are considered as weekends;
8. All Iranian employees are entitled to at least one month of holidays per annum in addition to all official state holidays;
9. In Iran, an employee can only be dismissed from service after a formal hearing at the Islamic Labor Council or the Labor Discretionary Board;
10. All employers are required to contribute 23% of their employee’s salary to the latter’s social security account;
11. Before leaving Iran permanently, foreign entrepreneurs will need to obtain an exit permit from the nearest police department.