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Date: October 12, 2012
Ministry of Economic Affairs and Finance
Economic and Finance Affairs Organization of Khuzestan Province
Investment Tax Exemptions and Encouragements
Direction Tax Law
The income derived from all activities in the field of agriculture; animal rearing; stockbreeding; fish farming; bee-keeping; poultry husbandry; hunting and fishing; sericulture; revival of pastures and forests, horticulture of any type and palm trees, is exempt from payment of taxes.
The income from producing and mining activities, which is derived and declared by producing and mining of non-governmental legal entities at producing or mining enterprises for whom exploitation licenses are issued, or with whom extraction and sale contracts are concluded, by relevant ministries as of date of execution of this Article, as well as service incomes of hospitals, hotels and tourism accommodation centers of the said individuals for whom exploitation licenses are issued as of the mentioned ate shall be exempt from the tax for a term of 5 years from the date of exploitation , extraction or activity . As regards the less developed regions, the tax rate of zero (0%) shall be applied for a period of ten (10) years.
A. The tax rate of zero (0%) is a method in which the taxpayers are bound to submit tax return, legal books, accounting documents (where applicable) for their incomes as provided for in this law in due time to National Tax Administration Organization. The said Organization shall study the relevant tax returns and determining taxable income based on documents and those tax returns and after determining taxable income of the taxpayers their tax shall be calculated on zero (0%) rate.
B. The tax rate of zero (0%) for producing and service units and other centers subject of this Article who employ more than 50 manpower one year shall be added for tax exemption in exchange for each year of manpower increase provided that they increase their manpower minimum 50% in comparison with the previous year. The number of manpower and also the increase of manpower must confirm by Ministry of Cooperative, Labor and Social Welfare and by presenting positive documents to Social Security Organization. In case of deduction of manpower from the minimum of the said increasing in the next year in which enjoy the tax encouragement as set forth in this Paragraph, the relevant of the year shall be claimed and collected. The retired, service-purchased and resigned personnel shall not considered deduction.
C. The term of enjoying from the tax rate of zero (0%) for the said economical units subject of this Article located at industrial parks or Special Economic Zones is two years and in case that the mentioned units locates in industrial parks or Special Economic Zones of the less developed zones shall be increased to 3 years.
D. The term and condition for enjoying any kind of tax exemption for natural and legal entities who are active in free zones and other regions of Iran is submitting tax return in due time. The tax return of legal entities includes balance sheet and profit and loss statement provided by National Tax Administration Organization.
E. For encouragement and incensement of economic investments in units subject of this Article in support Term via the tax rate of zero (0%) for each case, the investment in less developed regions and other regions shall be supported as follows:
1. In Less Developed Regions:
The tax of the years after tax computation term with the tax rate of zero (0%) as mentioned in this Article shall be considered zero (0%) tax till the time the total of taxable income of the unit reaches twice of registered and paid capital and after that the relevant tax shall be computed and collected with rates described in Article 105 of this Article and its paragraphs.
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2. In other Regions:
50% of tax of the years after tax computation term mentioned in this Article shall be computed and collected with 100% exemption and the remaining 50% with the rates set forth in Article 105 of Direct Taxation Act and its Paragraphs. This order shall be continued till the date the total of taxable income of the enterprise become equals to registered and paid capital and after that the 100% of the relevant tax with the rates set forth in Article 105 and its Paragraphs of this Act shall be computed and collected. The transportation income of non-governmental entities shall be subject to tax encouragement of Part 1 and 2 of this Paragraph. The non-governmental entities subject of this Article founded before this Amendment in case of re-investment may enjoy from the tax encouragement of this Article. Any kind of investment made by obtaining the permit of the concerned legal authorities and for the purpose of foundation, development and renovation of the said enterprises for creating fixed assets excluding land is subject to this Paragraph.
F. The said land excluding at the end of Paragraph D regarding non-governmental legal entities at transportation, hospitals hotels and tourism accommodation centers shall not be executed merely at the limits determined at legal licenses issued by the concerned authorities.
G. In case of deduction of registered and paid capital of the mentioned entities enjoyed from tax encouragement set forth in this Article for increasing their capital the tax and relevant penalties shall be claimed and collected.
H. In case that the investment subject of this Article made by the partnership of foreign investors and by obtaining license from Iran Investment and Economic and Technical Aids, in exchange for each 5% of foreign partnership and investment the sum equal to 10% shall be added to tax encouragement of this Article in proportion to the registered and paid capital and maximum to 50%.
I. The foreign companies produced high quality products with prestigious brands in Iran by using capacity of domestic enterprises provided that export minimum 20% of their products as of date of signing contract with Iranian enterprises shall be enjoy 100 tax exemption at tax computation term and in case of termination of mentioned term shall enjoy 50% of tax exemption in proportion to declared income resulted from selling products at the said term mentioned in this Article.
J. The tax rate of zero (0%) and encouragement of this Article shall not apply to the income of producing and mining entities established within a 120-kilometer radius from the center of Tehran or within 50- kilometer radius from the center of Isfahan and within a 30-kilometers radius from the administrative centers of provinces and cities with a population exceeding 300,000, according to the latest census.
Information Technology (IT) Manufacturing Units, with the confirmation of the relevant Ministries and Deputy Office of the President for Scientific and Technology Affairs in any condition, shall enjoy the privileges of this Article. Also the tax of producing and mining enterprises within all Special Economic Zones and industrial parks except the Special Economic Zones and industrial parks within the 120-kilometers radius from Center of Tehran Province shall be calculated on tax rate of zero (0%) and enjoy tax encouragement.
Regarding Special Economic Zones and industrial parks or manufacturing units located within limitation of two or three provinces or cities, the criteria for determining the limitation shall be in accordance with the bylaws approved three (3) months before passing the law at the common suggestion of the Ministry of Industry, Mine and Trade, Ministry of Economic Affairs and Finance, Iran Management and Planning Organization and Iran's Environmental Protection Organization (IEPO) and approved by the Council of Ministers.
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K. Iran Management and Planning Organization by assisting Ministry of Economic Affairs and Finance at the first quarter of each 5-yar Plan shall pronounce the list of less developed regions including province, city, town, county and rural district. In this respect some indices such as unemployment and investment for production rate are considered and shall be passed by the Cabinet. Till the service of new list, the list of former Plan is valid. The date of commencing activity attested by legal authorities shall be considered for computation of tax exemptions of the less developed regions.
L. All enterprises for internal and international tourism that hold exploitation permit from the related authorities before execution of this Article shall enjoy an annual exemption with regard to 50% of their applicable taxes for a term of 6 years after forcing of this Article. The provisions of this Article shall not be applicable regarding the income resulted from dispatching tourists to foreign countries.
M. The 100% of income declared by tourism and pilgrimage agencies having license from the concerned legal authorities that collected from absorbing foreign tourists or dispatching pilgrims to Saudi Arabia, Iraq or Syria shall be calculated on tax rate of zero (0%).
N. The tax rate of zero (0%) subject of this Article is merely includes income declared excluding incomes non-declared. This order is enforceable regarding all tax issues shall be calculated on tax rate of zero (0%) base in this Act and other rules and regulations.
O. The research costs of private legal entities and cooperatives in producing and industrial enterprises hold exploitation license from concerned ministries that cooperate with universities, research centers and higher education institutions having finalized license from Ministry of Science, Research and Technology and Ministry of Health and Medical Education made in the scope of Iran Scientific Comprehensive Drawing shall be exempted of tax payment maximum equal to 10% of tax declared, provided that the annual progress report approved by universities research council and/or the concerned research centers and that the gross declared income arising from producing and mining activities shall not be less than 5,000,000,000. The equal sum deposited to tax account of the said individuals shall not be accepted as tax expenses.
The executive instruction of this Paragraph upon the proposal of Iran Tax Organization shall be approved by minister f Economic Affairs and Finance, minister of Industry, Mine and Trade, minister of Science, Research & Technology and minister of Health and Medical Education.
Note 1. All tax and computation exemptions with tax rate of zero (0%) exceed the current rules and regulations mentioned in this Article shall commence at the beginning of the year 2016 (beginning of the year 1395 in the Persian calendar)
Article 138 (bis):
The individuals provide cash money for financing project-plan and revolving capital of producing enterprises in partnership agreements shall enjoy of tax on income exemption the sum equal to at least the expected profit rate in partnership agreements approved by the Money & Credit Council and for payer of profit the equal of said paid profit rate shall be considered as acceptable tax expenses.
Note 1. The individual enjoy the exemption of this Article are not entitled to withdraw their cash money from producing enterprise. In case of cutting cash money, equal to current price of the used exemption, the tax of the year that money withdrew shall be added.
Note 2. The discernment of realization of applying cash money for financing project-plan or revolving capital is by the relevant tax department.
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100% of the income derived from exportation of non-oil services and goods and agricultural products and 20% of income derived from exportation of taxable raw materials shall be calculated on tax rate of zero (0%). The list of goods subject to this Article shall be commonly proposed by the ministries of Economic Affairs and Finance, Industry, Mine and Trade, Oil, Chamber of Commerce, Industry, Mines and Agriculture and approved by the Council of Ministers.
Note 1. 100% of the income derived from exportation of different goods that have been, or will be, imported to Iran on transit, and are exported without making any changes in the substance thereof or doing any works on them, shall be calculated on tax rate of zero (0%).
Note 2. The provisions of this Article shall be come into force after completion of execution term of 5th five-year of Iran Development Plan Jan. 5, 2011.
Ten percent of the tax on income derived from the selling of commodities accepted and sold in the Commodity Stocks, and 10% of the Tax on income of companies listed in the domestic or foreign stock exchanges, and 5% of the Tax on Profits of companies listed for OTC transactions of domestic or foreign stock exchanges, shall be rebated after the approval of the Stock Exchange Organization as of the year of enlistment until the year they are unlisted from the stock exchange. The abovementioned exemptions shall be doubled for companies listed in the domestic or foreign stock exchanges or OTC markets of domestic or foreign stock exchanges, provided that at the end of the fiscal period, and based upon the approval of the Stock Exchange Organization, they have at least 20% of free floating shares.
Free Zones Administration Act
Natural and legal persons engaged in any kind of economic activity in Arvand Free Zone are exempt from payment of tax on income and property tax as subject of Tax Direction Act from the date of the commencement of the operation mentioned in the permit for a term of twenty (20) years. It is evident that in case of failure to submit tax return and the financial statements of the same year they shall not be subject to exemption and the tax of financial years shall be collected considering relevant rules and regulations.
Importation of goods produced in Arvand Free Zone to other parts of the country is exempt from payment of all or a part of customs duties and commercial benefit tax up to the added value thereof in Arvand free Zone, upon approval by the Council of Ministers.
Importation of goods produced in a Free Zone all or parts of whose raw materials are wholly or partly supplied domestically is exempt from all or a part (proportionally) of the customs duties and commercial benefit tax relating to the respective domestic raw materials.