Date: 10/09/2017
Minutes of the meeting dated 10/05/1397 of the Supreme Tax Council
In accordance with Clause 3 of Article 255 of the Direct Taxes Law
Letter No. 260/6564/D dated 20/09/1397 from the Honorable Vice President of Value Added Tax in connection with the taxes and duties subject to the Value Added Tax Law regarding the transportation services of imported goods, according to the reference dated 20/09/1397 from the Honorable Director General of the organization The country’s tax affairs were raised in the meeting of the Supreme Tax Council in the implementation of paragraph 3 of Article 255 of the Civil Code.
Ambiguity description:
According to Article (15) of the Value Added Tax Law, the basis for calculating the import tax of goods is the customs value of the goods (purchase price, transportation cost and insurance premium) plus the import duties (customs duties and commercial profit) listed in the customs documents. Based on this, the transportation cost is the basis for calculating taxes and duties in the implementation of Note 1, Article (20) of the above-mentioned law, and the importer of the goods must pay the specified taxes and duties to the said authority at the point of entry by the customs. In order to provide cargo transportation services, shipping companies are obliged to issue invoices under Article (19) of the Marqom Law and collect taxes and value added duties from the parties to the contract, and this has resulted in double payment of taxes and duties for cargo transportation services. . According to the existing procedures, tax units are obliged to accept tax credit for both payments in the above way, but due to disagreements in this field, two theories have been proposed as follows:
The first theory:
According to Article (1) of the Value Added Tax Law, the provision of goods and services in Iran has been ruled, and shipping services are carried out from the origin of foreign countries to the territory of territorial waters, and the calculation of the shipping distance in Iran cannot be calculated, therefore, the issue is not one of the examples of services in Iran, and based on this, the shipping services of shipping companies are not subject to taxes and duties, and only taxes and duties from the subject of Article (15) of the aforementioned law and based on Note (1) ) Article (20) is collected from imported goods by the customs of the Islamic Republic of Iran. Further, according to the circulars No. 200/15332/S dated 29/08/1392 and 200/95/67 dated 10/04/1395, only international cargo sea transportation services during the period of Mehr 1392 until the end 2014 is not subject to the payment of taxes and duties based on the permission received from the headquarters of special economic measures.
The second theory:
Considering that the transportation of goods is carried out by shipping companies inside Iran, the issue is one of the examples of Article 1 of the Value Added Tax Law, and the aforementioned transportation is in addition to the taxes and charges of Note 1 of Article (20), which is based on Article (15) The value added tax law is collected by the customs of the Islamic Republic of Iran from imported goods, the mentioned transportation services will be subject to the relevant taxes and duties.
Comment of the Supreme Tax Council:
Considering the ambiguity raised as described above, the Supreme Tax Council, in the implementation of paragraph 3 of Article 255 of the Direct Taxes Law approved in 1366 and its subsequent amendments, after the necessary investigations and exchanges of opinions regarding the subject, expresses its opinion as follows:
Majority opinion:
According to Article 1 of the Value Added Tax Law, the supply of goods and the provision of services in Iran, as well as their import and export, are subject to the provisions of this law, so international shipping for the import of goods from other countries to the customs entry point of the Islamic Republic of Iran, whether carried out by an Iranian or foreign shipping company, it is not one of the examples mentioned in Article (1) and therefore it will not be subject to taxes and VAT duties.
This issue can be extended to the services provided by brokers and agencies in proportion to the fees they receive for ancillary transportation services such as unloading, loading and towing, fuel supply, etc. It will not be inside Iran.