As our readership will notice, this periodical has
commenced a new stage of its journalistic life. Not only theform and appearance
of the journal is reshaped, but noticeable steps are also being taken toward
thediversification of the subjects and more effective participation of
newcomers in preparation of articlescontained therein.
Those alterations, nevertheless, would not signify
any deviation from the main goals and principal policies ofthis magazine. We
have always been endevouring to create an appropriate ground for tax researches
andstudies, and to provide a suitable forum for promulgation of tax knowledge
among taxpayers and other groups interested in tax studies.
The resources and means within our reach have
always been limited, in comparison with other papers, but itnever discouraged
us, and we could manage to overcome difficulties, so that this journal could
gainpopularity among the vast categories of taxpayers, tax officials and
academic centers.
We would like to
address the tax experts and others who are interested in tax debates, and ask
them oncemore to take part in this productive undertaking. They may focus on
specified subjects, especially issue ofcertain ambiguity, in respect of which
no single and clear solutions are being adopted. The shortcoming ofregulations
is usually the most important and common cause of presence of such vaguenesses.
Deliberationon these fields of research and investigation can be of great help
for solution of cases of ambiguity.
Wider and more common themes may also be dealt
with. Among them one can refer to the subject ofcomputerization of tax
information system. Not only the tax experts with experience in this field, but
also thespecialists in the field of computer science and programming might be
of great assistance. All other topics inthe area of tax and taxation can be
addressed and presented in this journal.
Dr.
Aliakbar Arabmazar
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The BSTDs (Boards
of Settlement of Tax Disputes) are vested with the power to receive andreview
all tax disputes and claims. The parties to disputes are taxpayers and tax
officials. Whenthe parties are summoned by a BSTD, they have to attend the sessions
of the BSTD to defendtheir cases. It sometimes happens that the tax officials
ignore this duty and refrain fromattending the meetings of BSTDs. The Ministry
of Economic Affairs and Finance issued a circularin this respect and condemned
such behavior. It has been emphasized in the circular that therelevant tax
assessors are obliged to attend the meetings of BSTDs, and to defend their
casesseriously by presenting all kinds of available evidence and documents.
Those neglecting this dutyare warned and told that they will be prosecuted by
the Office of the Disciplinary Prosecutor ofTaxation Affairs.
The chief
assessors are also directed to follow up the execution of this order. They have
to beafter the tax assessors and see to it that they would observe the duty of
attending the sessionsof BSTDs. In case of discovering failure on behalf of the
assessors, the chief assessors have toreport the issue to the Office of the Tax
Prosecutor for prosecution of the failing officials.
Section 3 of the third Chapter of
the Direct Taxation Act (Articles 82-92) contains theregulations of the salary
tax. Article 91 of this section provides for the kinds of salary incomethat are
exempted from taxation. A law was adopted by the Parliament during the last
year, thatcomprises payments to the civil servants. The law covers, in
particular, some special kinds offringe benefits which are not specifically
named by the articles of the aforesaid section of theDirect Taxation Act.
Therefore ambiguity raised as to the applicability of the exemptions to
theseparticular fringe benefits. A new circular letter of the Ministry of
Economic Affairs and Financeexamines these cases and provides that:
1. The money paid to employees as
the "service bonus" is to be considered subject to paragraph5 of the
aforementioned Article 91, and thus is tax exempted.
2. The payments to the civil
servants under the title of "marriage expenditures" (in respect
ofpermanent marriages), as well as the money paid to employees when their first
child is born, bothare examples of paragraph 13 of the Article 91, and
therefore are exempted from salary tax.
3. The payments
made as a part of "death expenditures" is also subject to paragraph 5
of thesame Article 91, and should be regarded as tax exempted.
4. The money paid as an assistance
in respect of the expenditures of death of a member of theemployee's family, is
not tax exempted and should be taxed as an item of salary income.
Article 2 of the iranian Direct Taxation Act
enumerates specific institutes and other juridicalpersons whose income is -
under certain conditions - exempted from taxation. The paragraph 2of this
article pertains to the Society of the Red Crescent of the Islamic Republic of
Iran,Organization of Social Security, saving funds of pension schemes, schools
of Islamic sciences,foundations of Islamic revolution, and the Fund for
Improvement of Endowments.
Note 1 of the Article 2, on the other hand, provides for
cases where the income of the saidinstitutes is earned through the economic
activities, like the activities performed in the field ofproduction,
industries, mining, trade, as well as the income derived from real estates.
Thesecategories of income are excluded from the general rule of the Article 2,
ane are subject totaxation.
Based on these considerations, a question was raised as to
whether the income of theseinstitutes from their banking deposits, namely the
interest accrued to such deposits, could beconsidered as an example of
"economic" and "commercial" activities, and thus being
subject totaxation.
The aquestion was referred to the Supreme Council of Taxation
(SCT) for consideration. TheSCT reviewed the subject in its Plenary Board and
decided that the interest earned from bankingdeposits is beyond the categories
of "economic activities" mentioned in Note 1 to Article 2.Therefore,
the income so derived, is - according to the SCT - exempted from taxation, by
virtueof the paragraph 2 of the same article.
MULTIPURPOSE COOPERATIVES
Under the Article 133 of the Direct Taxation Act, the
income of certain cooperative companies istax exempted. The Cooperative
Ministry sent a letter to the Finance Ministry and stated thatthere are special kinds of cooperative companies
which perform several activities. In otherwords, they are multipurpose
cooperatives that undertake the businesses of severalcooperatives enumerated in
the Article 133. Thus, they can - according to the Ministry ofCooperatives -
enjoy the tax exemption status provided under the said article with regard to
eachof those separate cooperatives.
The Ministry of Economic Affairs and Finance referred the
case to the Plenary Board of theSupreme Council of Taxation for reviewing. The
Board considered the matter and delivered itsopinion unanimously. It was of the
opinion that the Article 133 refers to certain types ofcooperatives, and any
other cooperative not mentioned therein, could not enjoy the taxexemption. So,
the multipurpose cooperatives which are not enumerated among such
particularentities, are not entitled to tax exemption provided in the said Article of the tax law.
Certain changes are recently being made in respect of the
minimum amount of salary income ofemployees which is exempted from taxation.
Before this amendment, the amount of the saidexempted salary was different for
employees of the public and private sectors. The employeeswhose salaries are
paid by the ministries, governmental institutes and companies, as well asthose
receiving their salaries from "municipalities", used to enjoy a
higher level of tax exemption.
so, the employees of municipalities could take benefit from
their higher tax exemption. But, themunicipalities have some companies under
their control and ownership. The ambiguity had beenraised with regard to the
employees of these particular companies. Could they enjoy the samehigh level of
exemption, as the "direct" employees of municipalities, or not?
The question had been referred to the Plenary Board of the
Supreme Council of Taxation, and ithad delivered a negative opinion in this
regard. The Article 133 of the tax law does not -according to the Plenary Board
of the SCT - cover the affiliates of municipalities, and thus theyare not
entitled to enjoy the higher level of exemption.
The Municipality of the city Ahwas (a southern town of the
country) filed a protest against theopinion of the Plenary Board of the SCT
with the Administrative Court of Justice.
The Court - which is a branch of the judiciary - confirmed
the opinion of the SCT, and decidedthat the employees of the affiliates of
municipalities may not enjoy the higher level of exemptionprovided for
employees of municipalities themselves, since the relevant articles of the
DirectTaxation Act pertains to municipalities exclusively.
The Martyrs Foundation of the Islamic Republic of
Iran has been established for giving assistanceto the families of those who
were martyred for the sake of the revolution, or during the war withIraq. The
Foundation owns and manages wide range of properties. It provides houses to
thefamilies of martyrs for dwelling, while keeping the ownership of properties
for itself. The relevanttax authorities considered the relationship between the
Foundation and the occupants of thehouses as the relation between the landlord
and tenants. Therefore they demanded theFoundation to pay taxes on rental
income.
The Foundation protested and declared that the opinion of the
tax officials is not correct, sincethe dwellings in question are provided free
of charge, and no rental is earned from the familiesreceiving this special kind
of assistance.
The Ministry of Economic Affairs and Finance reviewed the
matter and rendered an opinion,which is contained in a special circular. It has
been stated in the circular that the houses used bythe families of martyrs, are
given to them as a kind of assistance and charity, and nolandlord-tenant
relationship does exist in this case. The charitable help of this kind is -
under therelevant regulations of the Direct Taxation Act - exempted from
taxation whatsoever. Therefore,the tax officials are ordered to stop demanding
taxes in this respect.
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ABSTRACTS OF PERSIAN ARTICLES
EDITORIAL
The Editorial in this issue
is devoted to the subject of commencement of a new stage in thelife of the Maliyat
journal and changes that has taken place in the form and contents of
thisperiodical. Diversification of subjects and effective participation of
different groups inpreparation of articles of the journal is another aim of new
changes. The same theme isdiscussed in the Editorial of English section as
well.
Interview
with the Director General of Finance and Economy ofthe Province of Tehran
We had an interview with Mr.
Sadegh Kord-e-Zanganeh, Director General of the EconomicAffairs and Finance of
the Province of Tehran. This Province includes several cities in thecentral
area of Iran. The text of this interview is reflected in the Persian section. A
briefpresentation of economic situation of the Province is introduced, then the
intervieweeprovides information concerning the issues and problems of the
Directorate General underhis supervision.
Consumption
Tax, a Suitable Tax for Iran
The author introduces some
general observation regarding the role of taxation in the societyand imperative
needs that require governments to resort to taxation in all countries. Then
thecharacteristics of consumtion tax are
analyzed and reasonings are presented in favor of thisparticular kind of
taxation as an appropriate tax for a country like Iran. The article is
dividedinto two parts. The first part is provided in the current issue, and the
second and last part willbe presented in the next issue of the journal.
Economic
and Taxation Issues in the Province of Fars (part two)
The first part of the
interview with the Director General of Economic Affairs and Finance of
theprovince of Fars had been printed in the last issue of Maliyat journal. The
second and last partof the same interview is printed in the present issue. The
interview contains a briefpresentation of economic perspective of the Province,
then it reviews the taxation issues indetail.
A brief
Report on Accountancy of the Foreign Exchange Transactions in Iran (part two)
The first part of this
article was provided in the last issue of the journal, and the remaining ispresented
in the issue at hand. The subjects commented on in this part are focused on
thetaxation aspects of foreign
exchange transactions. The author presents several proposals forsolution of
existing problems and discrepancies in the field of accountancy and taxation
ofthis kind of transactions.
Tax
Concepts and Theories at a Glance
Several Common Terms are
defined and the history of evolution of theories in the field oftaxation is
presented in brief.
Crticism
on an article
An article had been printed
in the issue No. 14 of Maliyat journal regarding the legalcompetence of the
Administrative Court of Justice in the field of tax claims. The author ofthat
article was of the opinion that the Court is not competent to receive and
reviewcomplaints against the opinions rendered by the Plenary Board of the
Supreme Council ofTaxation. This article triggered reactions, especially among
the tax advisors, and criticalresponses were received by the office of the
journal. Two cases of these criticisms are printedin the present issue of the
journal without any judgement about their merits.
Cumulative
Index
As was mentioned above,
Maliyat journal has commenced a new stage of its publication.the new stage in
beginning with the present (sixteenth) issue. To give our readershippossibility
to have a general idea about the content of the previous issues of the journal,
wehave inserted a cumulative index of all articles and subjects contained in
the first 15 issues ofour publication.
REGULATIONS
AND RULINGS
The texts of latest laws,
regulations, decrees, and opinions of the Supreme Council ofTaxation are
reported in the Persian section of the Journal. A part of the same is presented
inEnglish section under the heading "Tax News".
TAX
GLOSSARY
Several tax terms and
expressions are presented and defined in each issue of Maliyat journal.Detailed
explanations follow the definition of the terms.
Consumption
Tax, a Suitable Tax for Iran
The author introduces some
general observation regarding the role of taxation in societyand imperative
needs that requires govenments to resort to taxation in all countries. Then
thecharacteristics of consumption tax are anlyzed and reasoning are presented
in favor of thisparticular kind of taxation as an appropriate tax for a country
like Iran. The article is dividedinto two parts: the firest part is provided in
the current issue, and the second and last part willbe presented in the next
issue of the journal.0
The End