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Iranian Tax Official Says VAT for Oil Products Did Not Materialize in 2010

Taxation Affairs Organization for Value-Added Tax (VAT) deputy head Mohammad-Qasem Panahi has lamented his organization’s ability to collect revenue.

Panahi said during an interview, "The total VAT revenue, including tax on oil products, passenger exit tax, cigarette tax, automobile transportation tax, vehicle registration tax, and import duties and taxes, in last year's budget was anticipated to be about $5.6 billion, of which $3.7 billion were collected last year. That is, 66 percent of the budget law target did materialize. The main reason for the non-materialization (of the complete budget plan) was that about $1.6 billion from oil products was anticipated to be collected, but because the Targeted Subsidies Plan and the floating of the price of oil products, especially gasoline, took place toward the end of the year 1389 (year starting 21 Mar 2010), and 10 months of the year were based on the previous price, this revenue did not materialize.

In last year's budget plan, $2.8 billion were revenues anticipated from the VAT only. In fact, $2.1 billion was collected and 74 percent of the targeted revenue materialized. In the current year's (1390) budget plan, $6.7 billion are anticipated from the VAT, of which $4.1 billion is anticipated as revenue. With the help of taxpayers, we will attempt a better materialization this year, because both oil product prices and the number of eligible taxpayers have increased. Also, the tax rate has increased 1 percent and the VAT rate has gone up from 3 to 4 percent."

Given gasoline shortages because of a lack of refining capacity, the Iran government is dealing with a significant problem in smuggled fuel being imported, which is not subject to government taxation, Jomhuri-ye Eslami newspaper reported.

By. Joao Peixe, Deputy Editor OilPrice.com



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