Human resource contracting activities were exempted from paying value added tax;

Human resource contracting activities were exempted from paying value added tax;

The General Board of the Administrative Court of Justice exempted human resource contracting activities from paying value added tax by revoking a clause of the circular of the deputy of value added tax of the tax affairs organization.

Following a complaint from the Deputy of Value Added Tax of the Tax Affairs Organization of the country and a request for the annulment of paragraph 11 of Circular No. 28004 dated 12/11/88 of this Deputy regarding the contracting activities of providing human resources, which are among the cases of providing taxable services and duties subject to the Value Tax Law. will be added and the providers of these services are obliged to calculate the related taxes and fees based on the gross amount included in the invoice and collect them from the other side of the transaction. 

The General Board of the Court of Administrative Justice, after discussion and review, and based on Article 12, Clause 10 of the Value Added Tax Law, services subject to salary income tax, exempted the subject of the Direct Taxes Law from paying taxes and announced that the provision of services subject to salary tax as Absolute is exempt from tax and restricting it to direct and indirect payers is contrary to the purpose and will of the legislator; Therefore, paragraph 11 of the circular is against the application of paragraph 10 of the aforementioned law and is invalidated. 

 In paragraph 11 of the aforementioned circular, it is stated: The contracting activities of providing human resources, which will be among the cases of providing services subject to taxes and duties subject to the value added tax law, and the providers of these services are obliged to calculate the related taxes and duties based on the gross amount included in the invoice and On the other hand, collect the transaction.

Human resource management contract services become relevant in situations where the employer assigns or pays the salary and wages of the human resources directly and directly and registers them in their legal offices under the salary expense, and the list of insurance and salary tax in the name of the employer. Relevant organizations should be provided. Obviously, in this case, only the fee for providing management services will be subject to taxes and duties.
 
It should be noted that according to Article 92 of the Law on Organizations and Procedures of the Court of Administrative Justice, if a decision is revoked in the general assembly, it is mandatory to comply with the provisions of the general assembly’s decision in subsequent approvals.
Mehdi Koh Soltani (financial services, accounting, financial and tax consultant):
The group of accountants and auditors of Tabriz
https://t.me/joinchat/BnzBsTuioTshiXBwf9bBPQ