Category: Taxation

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Update on Partial Amnesty for Taxpayers

In accordance with the newly-approved Budget for the fiscal year of 1397 (2018), taxpayers who have not cleared their taxes and penalties for the fiscal years of 1381 through 1396 (2002 – 2017), may pay the original tax along with 5% of the total penalties for these years, and will be excused from payment of the remaining 95% of the tax penalties. This decision will be effective for the next nine months, and will not be extended. The recently issued ruling from the Legal and Policy Department of the Ministry of Finance explains the implementation of this decision.

  • Who is covered by this decision?
    1. All natural persons whose incomes are taxable; and
    2. All legal persons (companies, non-profit organizations and other agencies whose incomes are taxable).
  • Who is not covered by this decision?
    1. Taxpayers who have already paid their taxes before enforcement date of this decision (January 25, 2018).
  • Which fiscal years are covered by this decision?
    1. Fiscal years of 1381 through 1396 (2002 – 2017), including 1396 (2017) are covered by this decision.
  • How does this decision apply to different categories of taxpayers?
    1. Taxpayers who have filed their tax returns:
      To those taxpayers who have filed their tax returns for the concerned years and have paid the taxes but 1) their tax files are under review by the tax offices, and 2) the tax offices have issued an amended tax assessment requiring the taxpayer to pay the original tax plus tax penalties, the decision will apply as follows (based on the different stage of the tax review):

        • Initial assessment stage:
          In this stage, the tax files are under initial assessment by the tax office, and the tax office has issued an amended tax assessment requiring the taxpayer to pay the original tax plus tax penalties. If the taxpayer pays the original tax included in the amended tax assessment along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
        • Audit stage:
          In this stage, the tax files are under audit by the audit team, and the audit team after completion of an audit has issued an amended tax assessment requiring the taxpayer to pay the original tax plus tax penalties. If the taxpayer pays the original tax included in the amended tax assessment along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
        • Law enforcement stage:
          In this stage, the tax file has been sent to the Law Enforcement Department for non-compliance by the taxpayer. If the taxpayer refers to the tax office and pays the original tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
        • Additional tax for anti-avoidance:
          Where a taxpayer enters into a transaction or arrangement with the intent to cause reduction of liability to pay tax, the tax office will determine the original payable tax plus tax penalties by itself. If the taxpayer pays this tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.

      Note: If after the initial assessment, audit or during the law enforcement stage, it is determined that the taxpayer is only required to pay additional tax penalties and the tax assessed in its tax return was correct, the taxpayer can pay 5% of the total penalties and will be excused from payment of the remaining 95% of the tax penalties.

    2. Taxpayers who have objected to the tax assessment and their objection is under review by the Tax Disputes Resolution Board:
      • If the Tax Disputes Resolution Board has issued a decision/tax assessment, and the taxpayer pays this tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
      • If the Tax Dispute Resolution Board or Court issues its decision/tax assessment by October 27, 2018, and the taxpayer pays this tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
    3. Taxpayers who have agreed to pay taxes in installments:
      If a taxpayer 1) has filed its tax returns, 2) has received the tax assessment (initial assessment or audit assessment), 3) has not objected to this tax assessment, and 4) has agreed to pay the taxes in installments, the decision will apply as follows:

      • If the amount to be paid in installments includes both the original tax and penalties, and the taxpayer pays the remaining tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
      • If the amount to be paid in installments only includes the penalties, and the taxpayer pays 5% of the remaining total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
      • If the taxpayer continues to make the payment in installments as agreed with the tax office, it will not be entitled to receive amnesty.
    4. Taxpayers who have not filed their tax returns for the fiscal years of 1381 through 1396:
      To those taxpayers who have not filed their tax returns for the concerned years and have not paid the taxes, the decision will apply as follows (based on the status of the taxpayer):

      • If a taxpayer who is actively operating, 1) files its tax returns or a tax assessment is issued by the tax office, and 2) pays the assessed tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
      • If a taxpayer whose business is inactive, 1) files zero tax return and assesses the penalties for failure to file tax returns, and 2) pays 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.
    5. Taxpayers who are subject to additional tax for failure to withhold or pay withholding tax:
      • If a taxpayer who is subject to additional tax for failure to withhold or pay withholding tax and has not fulfilled its duties (to withhold and pay withholding taxes, filing tax returns and withholding forms, etc), pays the original tax along with 5% of the total penalties by October 27, 2018, it will be excused from payment of the remaining 95% of the tax penalties.