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Maliyat Journal, No. 13 - Autumn 1996

 

 

 

IN THE NAME OF ALLAH

 

FROM THE PRESIDENT

 

The tax administration declared lately that they took some important steps towards the recognition of large taxpayers who have always been attempting to keep away from the burden of taxation. The steps resulted in collection of astronomic amounts of more than ten billion Rials in case of some single taxpayers.

This movement, if followed continuously, could be considered a good and inspiring beginning in several ways. First and foremost, it can elevate the feeling of fairness and equity among the common people. Such optimism is an imperative element and a must for raising the public sympathy and readiness to accept the necessity of taxation, and to comply with legal duties related thereto.

The term "tax culture" is used in this country for such kind of public awareness and approach with regard to taxation and tax duties. The authorities have always been emphasizing upon significance of the "tax culture" and the urgent necessity of its promotion. Where the predominant circumstances would allow the large taxpayers to evade taxation, then not the "tax culture" but the culture of tax evasion would prevail.

The success of the tax administration in collection of the aforesaid enormous amounts of taxes, was due to developments in the field of gathering and processing of tax information. The data and documents were presented to the taxpayers and obliged them to accept their dues. Computerization was an effective means for achieving such considerable results. The tax administration is paying at the present more attention to sophisticated services renderable by the computer. We hope that this new trend would continue in the future. This journal has always pointed out that the demographic changes of recent decades, as well as the unprecedented evolution of economic and social activities, left no room for traditional systems of dealing with taxation affairs. The number of taxpayers and volume of taxable transactions have grown so enormously that makes the computerization the sole and unavoidable solution.

The tax administration warned the taxpayers who resort to offenses and tax evasion tricks. According to the authorities, some taxpayers who have received the tax identification number (TIN) allow the other people to use their TIN for entering into transactions that need such TINs. Transactions so concluded shall be taken into consideration in computing their own tax liabilities.

The importance of data gathering system is referred to as the best means for finding and checking these types of tax offenders. Another arrangement adopted by some taxpayers to reduce their tax liability, is the division of taxable transactions between several cities. Thus they would enjoy lower progressive tax rates. The tax administration declared that the best measure to combat such kind of tax avoidance is to activate the aggregate tax system. This system does already exist in the Iranian tax law, but it is actually kept inoperative, because of certain difficulties encountered in the past. Now by using the modern technology of data processing, the possibility of vitalization of the system has become an achievable perspective.

 

Dr. Aliakbar Arabmazar

 

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TREATY DEVELOPMENTS

 

A COMMENT ON RECENT TAX TREATIES CONCLUDED WITH

 

A DOZEN OF FOREIGN COUNTRIES

 

BY Dr. Mohammad Tavakkol

 

Introduction

As it was mentioned earlier in this journal, our country used to be counted among the nations having the least number of international tax treaties. We had only three double taxation treaties in the past, namely:

- Convention for the Avoidance of Double Taxation with respect to Taxes on Income and Capital concluded with Federal Republic of Germany on December 20 1968;

- Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, concluded with France on November 7, 1973; and

- Agreement for the Avoidance of Double Taxation on Income from Shipping Activities concluded with Pakistan on 12 May 1990.

This situation was not on a proper scale with the actual position of the country in the arena of economic and trade relations. To change this state of affairs, the tax administration took remarkable steps towards the extension of international tax relations with other countries. Negotiations with Armenia, Byelorussia, Ukraine, Turkmenistan and Malaysia resulted in conclusion of agreements, which are submitted for further legislative actions. Similar agreements are at the stage of  negotiations with Bangladesh, Bulgaria, Indonesia, Syria, and Turkey.

 

Comments on Treaties

All agreements are drawn on basis of a prototype or pattern, which in its turn is based on the revised OECD Model Double Taxation Convention on Income and Capital. So we would concentrate our study on the same pattern, and one of the signed agreements, namely the one concluded with Ukraine. References will, obviously, be made to the revised OECD Convention, and also to some other tax treaties agreed upon between different countries. Iranian tax regulations - Direct Taxation Act of February 1988, as amended in 1992, in particular - will also be referred to as the case may require.

It should also be mentioned at this stage that all new Iranian tax treaties are drawn in three languages: Persian (Iranian national language), the language of the other contracting states, and English. It has been stated in the last paragraph of all treaties that

"In case of any divergence of interpretation, the English text shall prevail".

We will also base our study on English texts of the prototype as well as the Iran-Ukrainian treaties.

 

Title of the Treaties

The word "agreement" is given to all new Iranian tax treaties, while the previous treaties concluded between Iran and Germany (1968) and France (1973) are both named "conventions". Having a look at international tax treaties made during the last half century, we would see that three words are used for such treaties: arrangements, agreements, and conventions.

The first title, namely arrangement, is used frequently for treaties made with regions which are somehow under the control of other states. For instance, the following tax treaties of United Kingdom are titled as arrangements: Antigua and Barbados (1947), Belize (1947), Burundi (1950), Dominica (19680, Falkland Islands (1983), Solomon Islands (1950), Gold Coast (1947), Grenada 1949), Guernsey (1952), Jersey (1952), Kiribati (1950), Lesotho(1949), Sierra Leone (1947), and Uganda (1952).

Later some of these regions and political units were recognized as independent states (like Gold Coast which was named Ghana, Grenada, Lesotho, Sierra Leone, and Uganda), and the title of their tax treaties was changed to "agreement".

Words agreement and convention are both used for tax treaties, but the term agreement is gradually diminishing and the term convention takes its place in most cases. Let us take the example of England again. Leaving aside the "arrangements" we would see that the number of "agreements" is about one half of those called "convention". It is worth mentioning that most of "agreements" are pertaining to countries which were somehow associated with the Great Britain in the past.

Based on what stated above, we would recommend that the name of new tax treaties be altered to "convention", which is widely used in the contemporary tax treaties.

 

Personal Scope

Article 1 of the Agreement does not differ from the Article 1 of the OECD Model, except that the term convention is changed to agreement. It reads as follows:

"This agreement shall apply to persons who are residents of one or both of the contracting states."

The term person is defined in Article 3 (General Definitions) exactly like the relevant section of the OECD Model. According to section "c" of Article 3 (which corresponds to section "a" of the Model) "the term person includes an individual, a company, and any other body of persons"

. The term "company" is also defined as "any body corporate or any entity which is treated as a body corporate for tax purposes". This definition is also identical with one adopted by the Model.

What are worthy of mentioning here are phrases like:

"other body of persons" "any entity which is treated as a body corporate for tax purposes".  These categories of persons include bodies like partnerships, trusts, foundations, associations, societies, unions, statutory undertakings, etc. We would call these bodies "semi juridical persons", since they might not have legal personality as such, nevertheless they are treated as a body corporate for tax purposes.

Some of these creatures are not found in the Iranian legal system, and most people know very little about them. Suppose that a contrary situation would exist in domestic law of the other member of the treaty. Would such a difference of attitude create difficulties on implementation of the treaty? Did the people who prepared or signed the treaties deliberate on such potential problems? This is a subject that should be dealt with in a separate study.

Persons so defined will be subject to the treaty provided that they are residents of one or both of the Contracting States. This aspect of the Article 1, namely the subject of residence, is addressed in Article 4, which will be referred on when considering the said article.

 

Taxes Covered

The Agreement "shall apply to taxes on income and capital imposed on behalf of each Contracting state or its subsidiaries or local authorities, irrespective of the manner in which they are levied." As it can be seen, the text of paragraph 1 of Article 1 of the OECD Model is almost presented in this part of the Iranian treaty. The same is true in respect of paragraph 2 which gives definition of taxes on income and on capital.

Although the kind of taxes covered by the treaty are described in both paragraphs 1 and 2 of the Article 2, but reference has been made in the same article to the taxes in force at the time of conclusion of the treaty in each of the contracting states. Paragraph 3 of the Article 2 presents a complete list of existing taxes which are subject to the treaty. The paragraph reads as follows:

"The existing taxes to which the Agreement shall apply are in particular:

a) in the case of Islamic Republic of Iran:

1. the income tax; and

2. the property tax.

.........

b) in the case of Ukraine:

1. the tax on profits of enterprises; and

2. the income tax on citizens.

As far as the Iranian side of the treaty is concerned, direct taxes are covered by the Agreement and they are divided to two main categories, namely the "income tax" and the "property tax". These terms, headings, and divisions correspond exactly to the Iranian Direct Taxation Act (DTA). DTA is the only comprehensive taxation law of the country and consist of five main chapters. Chapter one is the shortest one, and defines the persons subject to taxation. The last chapter, namely Chapter 5 deals with procedural matters relating to the organization of the tax assessment authorities, and those of the organs responsible for settlement of tax disputes. Some miscellaneous matters are mentioned in Chapter 3. The most important subjects covered by this chapter are: cases of tax exemptions, deductible expenses, indications and coefficients for ex officio assessment of taxes, etc.

Chapter 2 and 3 constitute the substantial part of DTA. Taxes covered by the law are all mentioned under these two chapters: taxes on income and taxes on property. The concept of income tax as reflected in DTA is, more or less, the same as understood by the tax specialists everywhere in the world. The second category may, however, represent some difficulty in understanding. The term property tax under DTA covers firstly some kind of taxes which could be really defined as taxes on capital. Theses kinds of taxes are all pertaining to immovable properties.

In addition to that, the term property tax covers also stamp duties, and inheritance tax. It is useless to search for reasons why these taxes are classified as property tax, and the important thing is that they are there in DTA and they are considered as "property tax".

It is not also our case to argue if such taxes are, or not, really property taxes. The issue is that the inheritance tax becomes subject to a double taxation treaty which is not - in principle - pertaining to inheritance tax. It is clear that the treaty under review is typically a treaty on income and capital taxes. It is also a well established fact that inheritance and gift taxes are addressed in other kind of double taxation treaties.

Other Indications - There are other circumstances in the treaty that are indicative of the fact that it is not made to deal with the subject of inheritance tax:

1. The treaty is based on, and copied from, the OECD Model, which does not deal with the inheritance tax.

2. The title of the treaty does not cover the inheritance tax.

3. Going through the articles of the treaty, one can not find any references to inheritance.

4. The existing taxes of the Ukrainian party subject to the treaty are also listed in paragraph 1 of Article 2. None of them has any relation to the inheritance tax.

 

Conclusion - One can gather from the above reasoning that non of the parties had in mind to apply the treaty to the case of inheritance tax. Why it is there in paragraph 3 of the Article 2, is a subject that occurred possibly unintentionally. Anyway, this is a mistake that must be corrected by the parties in appropriate manner.

Further Amendments Since new taxes may be imposed and alterations may be done in the existing taxes after conclusion of the agreement, paragraph 4 provides that:

"The agreement shall apply also to any identical or substantially similar taxes classified in accordance with definition of paragraph 1 of this Article which are imposed after the date of signature of this agreement in addition to, or in place of, the existing taxes..."

By comparing this text with the relevant part of the OECD Model Convention, one can see that the phrase: "classified in accordance with paragraph 1 of this Article" is an addition to the original text.

This phrase which has been inserted inside the paragraph 4, refers to the definition of Article 1, and thus makes the paragraph 4 of Article 2 dependent on Article 1. The consequence is that in the future attention should be paid also to the interpretation of Article 1. This not only may complicate implementation of the agreement, but it would also eliminate the advantage of paragraph 3 of the Article 2. The latter determines concretely all existing taxes which are covered by the treaty. It is much easier and much more safe to base our future judgment on this tangible being, instead of resorting to some general and absolute expressions.

The original text of the OECD Model is free from this complexity. Paragraph 4 of Article 2 comes immediately after the paragraph 3 and its reference is only to the previous paragraph. It might be interesting to know that in a similar double taxation treaty concluded between the same country (Ukraine) and the United Kingdom, such alteration has not been made in the text of the paragraph 4 of Article 2. On the contrary the reference has been made clearly to the paragraph 3 (...in addition to, or in place of, the taxes...referred to in paragraph 3 of this Article).

 

(FURTHER COMMENTS IN THE NEXT ISSUE)

 

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Tax News

 

WITHHOLDING TAX AND STATUTE OF LIMITATIONS

Under the Article 85 of the Direct Taxation Act (DTA), the employers paying salaries to their employees are required to withhold the applicable salary tax and to pay the same, within 30 days, to the relevant tax office.

Article 90 of DTA relates to a situation where the employer fails to comply with the aforesaid duty. In this case, the tax office shall calculate the applicable tax and claim it from the failing employer. Taxes so calculated and demanded are considered final under the Article.

Nevertheless the employer has the right to protest, in which case the issue shall be referred to the Board of Settlement of Tax Disputes for reviewing.

Article 157 of DTA on the other hand, states that the liability of the taxpayer become statute-barred after expiry of a period of three years from the tax payment deadline, provided that no claim is put forward by the relevant tax office during that period.

A new circular of the Finance Ministry refers to the regulations of the said article and states:

1. The statute of limitation provided in the Article 157 must be taken into account in implementation of the Article 90. It means that the claim of the deferred salary tax by tax offices ( as referred to above) should take place before the relevant taxes are statute-barred. Otherwise, the statute of limitation will govern and the employer who has failed to withhold and pay the salary tax, can reject the demand of the tax office.

2. There is an exception to that rule. If the employee withholds the applicable tax, but he fails to remit the same to the tax office, then the statute of limitation shall not effect the case and the employer will have to pay to the Ministry taxes so withheld, even if the said three years period is expired.

The logic behind this ruling is as follows:

A. When an employer withholds certain percentage of his employee's salry, the money so deducted does not belong to him. It is rather a property of the government. Then if the employer would fail to transfer the money so deposited with him to its legal owner, he must be considered as a debtor who refrains from payment of his dues. Therefore the statute of limitation provided for in the Article 157 can not be applied, because it is pertaining to taxpayers solely, and not to the ordinary debtors.

As far as the ordinary debtors are concerned, no statute of limitation does exist in this country. The old regulations of the civil procedural law containing statute of limitation, all were canceled by the Council of Constitutional Guardians, since they were considered to be contrary to the principles of the Islamic canon law.

 

DATE OF COMMENCEMENT OF RESPITE FOR PROTESTING

Tax disputes are to be settled by an organ called the Board of Settlement of Tax Disputes

(BSTD). The decision of the BSTD is final, except where the taxpayer or the relevant tax office would file a protest within one month from the date of notification of BSTD's verdict. The question pertains to the subject of notification. Notification to whom? As far as the taxpayer is concerned, the wording of the law is quite clear. The decision of the BSTD must be notified to the taxpayer, and the one month respite for his protesting begins exactly from the date the verdict is notifies to him.

But the case is not so clear in case of the tax officers. The relevant part of the Article 274 states:

"If the tax assessment official shall, within one month after the date of notification of the decision of the BSTD, file a protest in writing..."

As it can be seen from the above text, the recipient of the notification is not mentioned.

Notification to whom, the taxpayer or the tax official? This question was raised and referred to the Supreme Council of Taxation for reviewing and expressing an opinion.

The SCT reviewed the matter in its Plenary Board, and since the members of the Board could not reach unanimous decision, two separate opinions were rendered by the majority and minority members of that organ.

 

OPINION OF THE MAJORITY

The Majority based its opinion on the fact that two separate paragraphs in the Article 274,

DTA are stipulated for taxpayers and tax officials. In the first paragraph the right of protesting is granted to the taxpayer. The respite for the taxpayer's protesting is also provided in the same paragraph. Then another separate paragraph provides the same matters in respect of the tax official.

This separation of cases means - according to the Majority - that the issue of notification must also be viewed separately. The Majority stated at the end that the date of commencement of the respite for protesting is different in respect of the parties to the dispute. The date of notification of BSTD's decision to the taxpayer or the tax official must be considered as the beginning of one month period of protesting respectively for each of them.

 

OPINION OF THE MINORITY

The minority members of the SCT's Board expressed a different view. According to them, the date of notification to the taxpayer must be regarded as the beginning of one month period of protesting for both the taxpayer and the tax official.

The Minority referred to another article of the same part of the law, which reads as follows:

"The taxpayer or the chief assessor concerned may, within one month from the date of notification of the final decision of BSTD... file a complaint with the Supreme Council of Taxation..."

Here the date of notification on the taxpayer is regarded as the commencement date of the respite for protesting, not only in respect of the taxpayer but for the tax official as well. This – according to the Minority - is an appropriate and sufficient indication that should be taken into consideration for solving the question under discussion,

 

ACCRUAL BASIS

Section 2 of the third chapter of the Direct Taxation Act (DTA) is devoted to deductible expenses and depreciation charges. The expenditures accepted as deductible are listed in the Article 148 of the same chapter. This article is very long and has 27 paragraphs and three notes.

A circular issued recently from the Ministry of Economic Affairs and Finance announces:

"Whereas questions have been arisen about the acceptability of some deductible expenditures - including those covered by the paragraphs 17 and 18 of the Article 148 of DTA - that are not paid out up to the end of each fiscal year, and in order to eliminate uncertainties in this regard, with the aim of adopting an unanimous approach;

It is hereby confirmed that deductible expenditures that are realized - according to verifying evidence and documents - during a certain year, should be accepted as deductible expenditures of the same year, whether they are actually paid or undertaken by the taxpayer."

This circular clearly emphasizes the accrual basis, according to which expenses are brought to account when they are incurred rather than when they are paid. It refers to clauses 17 and 18 of the Article 148 in particular. The reason is that the verbs used in both paragraphs are in past perfect tenses. Therefore, everybody would take them as meaning expenses that are actually paid out. The circular refers to these paragraphs in order to prevent such type of interpretation.

 

IMPORT DUTIES

The High Council of Commercial and Industrial Free Zones (consisting of several ministers) adopted an amendment to the regulations for collecting duties from importations to these zones. The amendment reads as follows:

1. Raw materials and machinery: - 0 - to 10% of the CIF value.

2. Intermediate goods and auxiliary materials: 3% to 40% of the CIF value.

3. Durable consumer goods: 5% to 45% of the CIF value.

4. Used goods and equipments: 15% to 45% of the CIF value.

5. Luxury and other goods: 5% to 50% of the CIF value.

Note 1. A discount equal to 20% of the accrued duties shall be granted in case of the goods, the documents of which would indicate that they are imported from the country of origin.

Note 2. A discount of 10% of the accrued duties shall be granted for the goods in relation to which a representative agent would exist in the country for after-sale services.

 

COMPUTERIZED INVOICE SYSTEM

Sales invoices issued by enterprises are considered as supporting documents against the figures registered in statutory books of businesses. Manner of keeping books, documents and records of taxpayers are regulated by several articles of Section 4 of the second chapter of the Direct Taxation Act (DTA), and a special by-law adopted by the Ministry of Economic Affairs and Finance.

 Article 95, DTA provides that:

"The statutory books for tax purposes mean the journal..., the ledger..., or any special books supplied by the Ministry of Economic Affairs and Finance".

Note 3 to the same article states:

"The Ministry of Economic Affairs and Finance may agree with other pattern of books and means of keeping accounts".

Article 8 of the By-law concerning the manner of keeping the books referred to above provides for preparation of accounting forms and papers (including invoices) by the computer. Some persons and companies have obtained the agreement of the Finance Ministry

- on basis of Note 3 to Article 95 DTA and Article 8 of the said by-law - to use computerized invoices for their transactions.

Now, a ministerial circular instructs those who have obtained the above permission, to insert serial numbers on their computerized invoices, otherwise they would be obliged to keep printed invoices (with serial numbers on them) according to models provided by the Ministry.

 

A NEW APPROACH TO THE INTERPRETATION OF LAW

The text of a letter from the President of the country to the Council of Constitutional Guardians is published in the Official Gazette. According to the Article 98 of the Iranian

Constitution, the Council of Constitutional Guardians is vested with the power to interpret the Constitutional Law.

The president asked the Council of Guardians to render an opinion with regard to the priority of conflicting ordinary laws upon each other. It has been mentioned in the letter that in one single date two conflicting regulations were adopted by the Parliament. The first one was the Budget Law of the Iranian solar year of 1374 (21 March 1995 to 20 March 1996), and the second one was the Law concerning the Method of Collection of Some Public Revenues.

Both laws contain regulations pertaining to tax and other revenues. Several cases of conflicting does, according to the presidential letter, exist between these two laws. The

Budget Law was itemized as the sixth, and the Law concerning Revenues as the seventh items of the agenda of the same session of the Parliament. In cases where two regulations are contradictory to each other, priority must be given to the most recent regulations. Since the aforesaid laws were adopted on the same date and the same session of the Parliament, the President asked the Council of Guardians to deliver its opinion with regard to this unique and unprecedented case.

The Council answered that in case of contradiction between the laws enacted by the

Parliament, priority should be given to the law which is adopted in a more recent date. If both regulations are enacted in the same date, the one adopted in the most recent hour shall have priority. In cases where both regulations are adopted simultaneously, the date of recognition of the Council of Guardians must be taken into consideration for determining the priority under discussion.

The Council of Guardians is the competent organ, under the Iranian new Constitution to review the laws adopted by the Parliament with a view to find whether they agree with the principles of the Constitution, as wella as with the Islamic canon law (Shari,a). The law becomes operative after such kind of recognition by the Council of Guardians takes place.

The Council stated, in its response to the President, that in case of conflicting regulations adopted simultaneously, the one recognized by the Council at a later time shall have priority over the other one.

 

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ABSTRACTS OF PERSIAN ARTICLES

 

 

EDITORIAL

The Vice Minister for tax revenue declared recently that important steps are taken by the Finance Ministry for recognition of large taxpayers who used to escape taxation in the past. The achievements reached in this respect were, according to the Revenue vice Minister, due to computerization and developments in the field of gathering and processing of data and information. The editorial of the Persian section is devoted to those statements. The same is dealt with in the editorial of the English section as well.

 

TAXATION IN THE PROVINCE OF HORMOZGAN

An interview wax held by this journal with Mr. Hossein Mohseni, Director General of Economic Affairs and Finance of the Province of Hormozgan. Interesting information was provided by the interviewee with regard to the economic conditions and tax revenues of the Province. The subject of the free commercial zone created in the Province and its impact on tax revenue was an interesting matter raised in the interview. Mr. Mohseni referred also to the elevation of the degree of tax compliance as an positive indication of a more healthy tax atmosphere in the province. Other aspects of the issue of taxation were also reflected on in the interview. They included achievements, as well as shortcomings and bottlenecks, of the tax organization, and steps taken towards the betterment of tax performances, etc.

 

A COMPARATIVE AND ANALYTICAL STUDY ON NEW TAX TREATIES CONCLUDED BDTWEEN IRAN AND SEVERAL FOREIGN COUNTRIES

Iran used to be quite inactive in the field of international tax relations. For a long time we had only three double taxation treaties (with Germany, France and Pakistan). Recently, a dramatic change took place in the Iranian foreign tax relations policy, so that several tax treaties have already been signed, and several others are at the stage of negotiation.

All new agreements are drawn, more or less, on basis of the revised OECD Model Double Taxation Convention on Income and Capital. The study undertaken by the author is concentrated on the same Model Convention and one of the signed agreements, namely the one concluded with Ukraine. Some other tax treaties of different countries, as well as the regulations of the Iranian Direct Taxation Act are also reviewed and referred to as the case might require. The main article of the English section (under the heading: Treaty Developments) is also pertaining to the same subject.

 

DOES THE IRANIAN TAX SYSTEM MOVE TOWARD THE ACCRUAL BASIS?

Under the accrual method, items of income and expenditure are brought to account when they are earned or incurred. According to a new circular of the Finance Ministry, justifiable expenditures incurred during a certain fiscal year, are deductible for determination of taxable income of the same year, even if they are not actually paid in that year. This means that the accrual basis is acceptable to the Iranian tax administration. The circular covers expenditures only, and it does not deal with the income side of the issue. This article discusses the subject matter of the circular, as well as the line adopted by the Direct Taxation Act with regard to the items of income.

 

COUNCIL OF CONSTITUTIONAL GUARDIANS AND A NEW METHOD FOR INTERPRETATION OF THE LAW

The Budget Law of the Iranian solar year of 1374 (1995-1996) and the Law concerning the Method of Collection of Public Revenues, were adopted by the Parliament on one and the same date. Both of them contain regulations concerning the tax and other similar revenues. Since both laws were adopted simultaneously and in the same date, and both contain conflicting regulations, the Council of Constitutional Guardians delivered an opinion which prescribed a new method for determining which of the contradictory laws should be given priority. The author analyzed the case and the opinion of the Council of Guardians. The same subject is dealt with in the English section of this issue (under the heading: A New Approach to the Interpretation of Law).

 

EUROPEAN ECONOMIC INTEREST GROUPING, A NEW LEGAL CREATURE WITH TAX CONSEQUENCES

The aim of this article is to introduce EEIGs to the Iranian readership. The history of creation of EEIG is briefly presented, then the rules of the relevant Council Regulations of EEC about formation, management structure, and other characteristics of EEIG is reviewed. The main part of the Article is devoted to tax issues related to the said groupings.

 

TAX AND ACCOUNTING SYSTEMS

In Iran, like many other countries, distinct accounting procedures are actually followed. One for maintaining accounts to be reflected in statements for submitting to tax authorities. The second one is used for presentation to the shareholders (owners) of entities. This state of affairs causes discrepancies and difficulties for both sides, taxpayers and tax officials. That is why the author chose the system currently used by Japanese for similar purposes. A wholly different situation exists in that country. Taxable income is usually computed on basis of financial statements that are presented to the owners of entities. Accounting methods are almost the same for both occasions. These issues are discussed in the article.

 

RULINGS AND REGULATIONS

The texts of latest laws, regulations, decrees, and opinions of the Supreme Council of Taxation are reported in the Persian section of the Journal. A summary of the same is provided in the English section under the heading: "Tax News."

 

TAX GLOSSARY

Several tax terms are presented and defined in each issue of Maliyat journal. Detailed explanations follow the definition of the terms.

 

LETTERS AND INQUIRIES OF READERS

The inquiries of our readers related to different tax matters are answered by tax experts. Readers in other countries also can address their inquiries to us.

 

Book Review

Authors and publishers are invited to submit one copy of their books and publications to the Editor for review. In each issue we will review their works and introduce them in both English and Persian sections of the Journal.

 

Contribution of Articles

Comments and articles are welcomed. Written assurance must be given that the article has not been published elsewhere. The author will be notified of the acceptance, rejection, or need for revision as soon as possible. Please submit a brief description of your educational and professional background and, if possible, a photograph.

 

TAX INQUIRIES

Readers who may have questions about the Iranian tax laws and procedures are encouraged to submit their inquiries for review. The inquiries will be reviewed by high-level tax specialists and, space permitting; the answers will be published (together with a summary of questions) in the journal. Otherwise, the answers will be sent directly to the inquirers.

 

The End

 

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