Iran Economy NewsIran’s Tax-Exempt Companies Wield Power

Iran’s Tax-Exempt Companies Wield Power

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An economist linked to the Iranian government says that 20 rent-seeking companies under the control of the regime’s supreme leader have a profit of more than 250 trillion tomans ($9 billion) and are exempt from paying taxes.

Hossein Raghfar, an economist, citing statistics from the Central Bank of Iran, has stated that 20 large state-owned rent-seeking companies in 2020 had a net profit of 250 trillion tomans, which, according to him, is equal to the government budget deficit, although other sources, including the report of the Court of Accounts of the Government Parliament, considers the figure of the government budget deficit to be higher than this figure.

According to Raghfar, the country’s trade balance has been positive in the first five months of 2021, but the government is still suffering from a huge budget deficit.

Although according to Raghfar, the government can compensate for this budget deficit from the place of taxation, the experience of previous years in the Rouhani government showed that in practice, taxation is done only from low-income groups and lower deciles of society. The upper deciles of society are tax-exempt due to their relationship with organizations of power and wealth.

Raghfar points out that in practice what will provide for the budget deficit will come from the pockets of the low-income groups, not organizations such as rent-seeking companies with a profit of 250 trillion tomans.

One of the main proposals made in recent years by government economists as a source of income for the budget deficit is to tax the vacant houses and real estate, which according to evidence and statistics about 2.5 million vacant houses in Tehran are at the disposal of banks and other powerful government-affiliated economic entities.

In other parts of the world, however, real estate taxes are one of the main sources of revenue for the budget.

However, due to the collusion of the authorities and despite numerous proposals to collect taxes from these vacant houses, the higher institutions in the government, such as the parliament, never accepted such a proposal.

Referring to the generous corruption of the government to its subordinates, Raghfar states that the governments, one after the other, ‘gave the country’s mineral resources to friends and comrades’ within the three decades after the war and did not receive any taxes from them.

Raghfar adds that the people’s share of these ‘beloved’ should be taken, but there is no will do so, otherwise, the solutions to the budget deficit are very clear.

He adds that today the country’s large mines are owned by non-taxable government’s ‘beloved’ and none of these companies and individuals have productive activities but produce natural resources that belong to all segments of the Iranian people, but they try to keep these cases hidden from view.

The people and the society should not find out about this situation and this secrecy should continue because, in this way, they can pocket huge resources.

Raghfar announces the amount of tax evasion of the power entities as 50 trillion tomans and adds that this tax evasion is not a small number, so why is this amount of tax evasion not stopped?

Referring to the 50 trillion toman tax evasion, Raghfar states that no tax exemptions are reported in this regime and add that when presenting the 2021 budget to the parliament, the government was asked to announce the number of tax exemptions, but the government has not taken any action.

Raghfar argues that part of the institutions and private companies owned by those in power are tax-exempt and pay only 2% tax instead of 20%.

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