Official Calls 1404 “Toughest Year” for Tax Collection as Smart Tax System Expands

TEHRAN (Iran News) Seyed Mohammad Hadi Sobhanian, head of the National Tax Administration, said at a press conference reviewing the organization’s performance in the Iranian year 1404 that the past year had been “different and difficult” compared to previous years.

“Despite the circumstances, we tried to fulfill our legal duties to the maximum extent,” he said, noting that special focus had been placed on taxpayers, guilds, and small businesses. “It appears the measures taken were effective, and we were able to get through this year with the full cooperation of trade associations.”

Sobhanian stated that there were no protests in markets or among guilds over tax collection. “Our effort has been to minimize bargaining in tax collection by relying on data-based taxation,” he said, adding that extensive meetings had been held with unions, guild representatives, and market traders. “We believe that through dialogue and mutual understanding, tax affairs can be advanced with minimal tension and damage.”

He stressed that despite the country’s particular conditions, tax collection was carried out smoothly in consideration of economic activists, small businesses, and guilds. “What was especially important for us was the smartization of the tax system, which we have pursued in recent years and whose results are now materializing,” he said.

Sobhanian explained that the organization’s recent performance reports reflect the outcomes of this digital transformation. “This does not mean 100 percent satisfaction, but compared to the past, there has been a noticeable change,” he noted. He added that while securing government revenue remains the primary goal, his personal priority is eliminating discrimination and improving tax justice.

The official outlined five major challenges under the traditional tax system, including:

Lack of high-quality and standardized audits due to a mismatch between the volume of tax files and the number of tax officers

Economic unpredictability caused by the heavy role of human discretion

A focus on post-detection enforcement against tax evasion due to structural gaps in the paper-based system

The potential for collusion between tax officers and taxpayers

Complex laws and business diversity that hindered effective auditing

Data-Centered Taxation and Pre-Filled Returns

Under the new system, Sobhanian said, data plays a central role. The administration now prepares pre-filled tax returns rather than leaving taxpayers with a blank form.

“In fact, based on the taxpayer’s own submitted information, a performance report is generated,” he explained. “In many cases, taxpayers approve the pre-filled return. If they do not, taxes are finalized through systemic auditing, and in cases of significant discrepancies, a formal audit will be conducted.”

Sobhanian also reviewed recent legislative developments. The Direct Taxes Law was amended in 2015 (1394 in the Iranian calendar), followed by the approval of the Law on Sales Terminals and the Taxpayer System.

He noted that POS-generated invoices have been extended as electronic invoices through 1405 (March 2027), after initially being scheduled to conclude in 1404.

The deputy economy minister added that value-added tax (VAT) calls under a new framework were approved by the heads of the three branches of government.

According to Sobhanian, the rollout of sales terminal systems has led to significant achievements, including improvements in the business environment and a fairer increase in tax revenues. “This benefits the public, as the government is not relying on inflationary resources to generate income,” he said.

One key indicator of the law’s implementation is the number of taxpayers using electronic invoices. “This year, 1.5 billion electronic invoices have been issued,” he reported.