Tax Criminalization in Iran

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Nourlaw.com-Tehran-5 October 2016- The website of the Tax Affairs Organization published a short Farsi language article on tax criminalization in Iran today. Our English translation of excerpts of that item is as follows:

Prevention of non-abidance of the law is a subject of great significance in all countries and Iran is no exception to this rule. One of the essential matters in the realm of tax law, are tax violations such as tax evasion that carry particular weight and efforts to combat this phenomenon are unstinting, as far as is possible, by passing preventive legislation.

In the Direct Taxation Act of Iran, tax violations such as tax evasion were dealt with in a non-criminal manner in the past and cash fines were imposed to prevent such actions. But, with the passing of the Amendment of the Direct Taxation Act in August of 2015, the perpetrators of tax offenses shall be sentenced, in addition to cash fines, to penal punishment set out in Articles 274 to 279 of the act.

According to Article 274 of the act, tax violations such as concealing economic activities and hiding accrued revenue, presenting falsified statutory books, statements and documents as evidence of ongoing business and using the Commercial Card of other persons for tax evasion, are now considered a crime. The perpetrators (as stipulated in Article 275) shall be subject to Grade Six Punishment (i.e., imprisonment ranging from six months to two years, deprivation of social civil rights for a period of six months to five years etc.).

In cases wherein tax violations are committed by a juridical entity, the company may be prohibited from transacting certain businesses or issuance of certain commercial instruments. In addition to the said punishment, the perpetrators of tax offenses shall be held liable for payment of the principal tax plus the applicable cash penalties, including the damages inflicted upon the government in accordance with the courts’ ruling.

In the amendment of the tax act, the violations which might be committed by tax offices have also been the focus of attention and according to Article 279, any unauthorized access to and misuse of the information registered in the tax data base relating to the identity, performance and assets of the tax payers for purposes other than assessing and collection of taxes and also disclosure of the information of tax payers is considered a crime. The perpetrator of such crime, in addition to being deprived of governmental and public services for two to five years, shall be sentenced to imprisonment ranging from six months to two years.