Chapter 1: Tax Authorities – Duties and Powers
Article 219 : The responsibility of determining and assessing the taxable income, as well as claiming and collecting the taxes due, as provided for in the present Act, shall rest with the State Taxation Affairs Organization, which was established and duly set up by virtue of Clause (a) of Article 59 of the Law on the Third Economic, Social and Cultural Development Plan of the Islamic Republic of Iran. The manner of discharging the duties and exerting the powers and the competence of each and every one of the tax inspectors and agents as well as those of the Taxation Affairs Administration, and the manner of executing the provisions made in the present Act, shall comply with the regulations which shall be prepared and drawn up, within six month after ratification and endorsement of the present Act, by the State Taxation Affairs Organization, to be duly approved by the Minister of Economy and Finance.
Note: The State Taxation Affairs Organization, until such date when the regulations mentioned in Article 219 above shall be endorsed, shall be authorized to use and duly apply the procedures, executive arrangements as well as position titles, as formerly used.
Article 220 : The following amendments shall be made with respect to the terms and expressions used in the present Act:
1. In the Articles mentioned below, “the State Taxation Affairs Organization” shall replace “the Ministry of Economy and Finance”:
Articles (26), (29), (39), (40), (41), (57), (80), (114) and (154) and Note 2 thereunder, Article s (158), (159) and the Note thereunder, Articles (160), (163), (164), (166), (169), (176), (186) and (191), Note 2 under Article (203), Article (215) and Notes 1 and 2 thereunder, and the Note under Article (230).
2. In the Articles mentioned below, “the Taxation Affairs Administration” shall replace the terms and phrases such as “tax agent”, “tax agents”, “tax assessor”, “chief tax assessor”, “tax district”, “district”, “tax district assessment office”, “assessment office” and “Economy and Finance Administration”:
Articles (26), (27), (29), (31), (34), (35), Notes 2 and 3 under Article (38), Article (39) and the Note thereunder, Articles (72), (80), Notes 1 and 2 under Article (87), Articles (88) and (102), Note 5 under Article (109), Articles (113), (114), (117), (126) and (154) and Note 2 thereunder, Articles (156), (161), (162), (164), (170), (179), (183), (184), (185), and (186) and the Note thereunder, Articles (188), (208), (210),(211), (213), (214), (227), (229), and (230) and the Note thereunder, Articles (232), (233), and (249).
Article 221-224 : Deleted.
Article 225: Deleted.
Article 226: The failure of a taxpayer to submit his tax declaration within the statutory period shall not prevent the Tax Affairs Administration from examining his balance sheet, submitted within the prescribed period of respite set forth under Article 156 of the present Act. Otherwise, the income stated in the balance sheet or profit/loss account already submitted shall be considered as final.
Note: The taxpayers shall be authorized to correct any mistakes in calculations in their tax declaration, balance sheet or profit/loss statement submitted to the Tax Affairs Administration, within one month after the date of submission of the said documents and submit a rectified declaration, balance sheet or profit/loss statement, as the case may be, together with all the supporting documents. In any case, the date of submission of the declaration shall be the date of filing the first declaration.
Article 227 : If a tax declaration, balance sheet or profit/loss statement shall be accepted or an assessment sheet shall be issued pursuant to an arbitrary assessment, and thereafter it shall become known that the taxpayer concerned used to have other activities, the incomes derived from which were concealed and not declared, and that the Taxation Affairs Administration authorities were not made aware of such incomes on the date of issuing the assessment sheet, the tax applying to the said incomes shall be assessed and the balance shall be collected according to the provisions of Article 157 of this Act.
Article 228 : In cases where the taxpayer’s declaration or his balance sheet and the profit/loss statement shall not be accepted or if he shall not submit the documents within the prescribed period, the taxes payable by the taxpayer shall be assessed in accordance with the provisions of this Act.
Article 229 : The Taxation Affairs Administration shall be authorized to examine all the taxpayer’s books and documents in order to verify his declaration or assess his incomes from any source, and the taxpayer shall be required to present and submit such documents; otherwise, they shall not be accepted as evidence in his favor for his tax matters for the same year, unless it shall be found out, before his income shall be finally assessed, that owing to certain reasons beyond his control it did not prove possible for him to present them at earlier stages.
The provisions set forth in this Article shall not preclude the authorities dealing with the case from invoking the documents and records presented by the taxpayer, for the purpose of determining his actual income.
Article 230 : In cases where books and documents indicating that certain income was earned by the taxpayer shall be at the disposal of third parties excluding those mentioned in Article 231, such third parties shall be required to present the books as well as the original or copy of the relevant documents and also any information regarding the taxpayers and their incomes to the Taxation Affairs Administration whenever they shall call and demand them. If the said third parties shall refuse to do so, and as a result of their refusal the government sustains loss, they shall be required to compensate the loss suffered by the government. The authority to prove that such loss was incurred through refusal to present documents by third parties and to determine the amount of losses incurred shall be vested in the competent judicial authorities who shall examine the case out of turn upon notice by Tax Disciplinary Prosecutor.
Note: In case of refusal of third parties in presenting the documents required by Taxation Affairs Administration, the State Taxation Affairs Organization shall be authorized to collect the information and documents relating the taxpayer’s income through Prosecutor General. Legal prosecution shall not prevent Taxation Affairs Administration from performing their duties.
Article 231 : In cases where the Taxation Affairs Administrations shall demand, in writing, from ministries, government organizations, government companies, Islamic revolutionary institutions, municipalities, and other non- governmental public organizations and institutes to provide them with the necessary information and comments in connection with the activities, business transactions and incomes of the taxpayers, the said departments and institutions shall be required to make available to them certified copies of relevant documents and any necessary information, unless the official concerned shall clearly state that divulgence of such information shall be detrimental to the national interests, in which case his refusal shall be subject to the approval of the Minister concerned and confirmation of the Minister of Economy and Finance. Failing this, the official who has refused to provide the required documents and information shall be prosecuted by competent judicial authorities, out of turn, upon notice by Tax Disciplinary Prosecutor and the offender shall be sentenced to appropriate punishment. As regards documents and information available with any judicial authorities, if such authorities shall consider their disclosure inadvisable, it may only be divulged, if approval of the Public Prosecutor General shall be obtained.
Note: In the case of banks and non-bank credit institutes, the State Taxation Affairs Organization shall request the documents and information concerning the incomes of the taxpayer through the Minister of Economy and Finance. Accordingly, the banks and nonbank credit institutes shall take the required actions in conformity with the opinion of the Minister of Economy and Finance.
Article 232 : The Taxation Affairs Administration and other tax authorities shall treat the information which they obtain in the course of examining the taxation affairs of the taxpayer as confidential and shall refrain from revealing it except for the purpose of income and tax assessment with the relevant authorities within the necessary scope. In case the obtained information is not kept confidential, the Taxation Affairs Administration and other relevant tax authorities shall be liable to provisions of Islamic Penal Code.
Article 233 : If in the course of their investigations, the Taxation Affairs Administration shall come across tax violation committed by the taxpayer as mentioned under Article 201, they shall be required to report such infringements to the Tax Disciplinary Prosecutor for prosecution.
Article 234 : Deleted.
Article 235 : The Taxation Affairs Administration shall be required to prepare and submit to the taxpayers, within 5 days after the date of receipt of the application by the taxpayer, a tax settlement certificate. This provision shall also apply to the taxpayers who have already paid their final tax liabilities.
Article 236 : Deleted.
Article 237 : The tax assessment notice (sheet) shall be prepared on a sound basis and adequate evidence and information and shall be prepared in such a way as shall explicitly indicate all the relevant activities and the incomes derived therefrom so that they may be quite clear to the taxpayer. Those who shall sign tax assessment notices shall be required to give their full names, position and title legibly thereon and shall be responsible in every respect for the contents of the tax assessment notice and for their own comments. In case of inquiry by a taxpayer on the method of assessment of tax, they shall be required to give a detailed report concerning the basis of assessment to the taxpayer and shall provide him with any explanation and clarification which he may require.
Article 238 : In cases where the tax assessment notice shall be issued and served on the taxpayer, he shall be authorized to make an objection thereto within 30 days after the date of such service and contact the Taxation Affairs Administration, either personally or through his fully authorized attorney, and apply for reconsideration, presenting his documents and evidences. The official in charge, after registration of taxpayers application and fixing a respite not exceeding 30 days after the date of reference by the taxpayer, shall reconsider the case, and if the documents and evidence presented to the said official in charge by the taxpayer shall be found as adequate proof for rejecting the contents of the tax assessment notice, the said official shall reject it and shall record the facts and circumstances with regard to such rejection on the reverse side of the assessment notice and sign it. In case the documents and evidence presented to the said official in charge shall be found effective in adjusting the amount of applicable tax, and if his opinion shall be accepted by the taxpayer, this fact shall be recorded on the reverse side of the tax assessment notice and signed by both the official in charge and the taxpayer, and in cases where the evidence and documents supplied by the taxpayer shall not be sufficient for rejection of the assessment notice or adjustment of the taxable income, the official in charge shall give his opinion in detail on the reverse side of the assessment notice and shall send the file to the Board of Settlement of Tax Disputes.
Article 239 : If, within a period of 30 days after the date of service of the assessment notice, the taxpayer shall signify in writing his acceptance of the assessment notice, or shall pay the taxes due according to the assessment notice or shall make arrangement for its payment, or shall manage to settle the differences between himself and the Taxation Affairs Administration in the manner prescribed in Article 238 of the present Act, the case shall be considered as closed as far as the amount of his taxable income is concerned. In case the taxpayer shall not file an objection in writing within 30 days or shall not refer to the relevant Taxation Affairs Administration within the respite mentioned in the above Article, the taxable income assessed and indicated in the assessment sheet shall become final.
Note: In cases where the assessment notice shall be served according to the provisions of the Note under Article 203 and Article 208 of the present Act, and the taxpayer shall not act according to provisions of this Article, he shall be considered as having objected to the assessment sheet in which case, as well as in cases where a taxpayer shall file an objection in writing to the assessment sheet within 30 days after the date of service, the file shall be sent to the Board of Settlement of Tax Disputes (BSTD) for further investigation.
Article 240 : While the case shall be considered by BSTD, the representative of the Taxation Affairs Administration shall attend the meetings of BSTD and present sufficient proof and give the necessary explanations in order to justify the contents of the assessment notice.
Article 241 : Deleted.
Article 242 : In cases where an excess amount shall be collected as tax owing to a mistake(s) made in the relevant calculations, and in cases where the tax collected shall be deemed and considered reimbursable in conformity with the provisions made in the present Act, the Taxation Affairs Administration shall proceed to pay to the taxpayer the reimbursable sums, within one month, utilizing the current collections.
Note: The excess sums collected from the taxpayers as tax, tinder any title pursuant to the provisions made in the present Act, shall be subject to a monthly damage equal to 1.5%, effective as of the date of collection of the excess sum up to the date of reimbursement of the same, which shall be paid to the taxpayer utilizing the current collections. The provisions made in the present Note shall apply to the final and provisional taxes paid, if it shall be established that the excess sums have been paid, and if such excess sums shall not be returned within 3 months after the date of application by the taxpayer.
Article 243 : Where the taxpayer shall apply for the reimbursement of the excess tax and the Taxation Affairs Administration shall reject his application, he shall be authorized, within 30 days after the date the decision of the said Administration shall be notified to him, apply to BSTD to consider his case. The decision made by the BSTD in this connection shall be final and unappeable. In case the decision made shall require the refund of the excess tax, the Taxation Affairs Administration concerned shall enforce such decision in accordance with the last paragraph of Article 242 above.
Chapter 3: Authority to Settle Tax Disputes
Article 244 : Unless otherwise provided for in this Act, the authority for consideration of all tax disputes shall be the Board of Settlement of Tax Disputes (BSTD). Each BSTD shall comprise 3 members as follows:
1. One representative from the State Taxation Affairs Organization.
2. One practicing or retired judge. If there shall not be a qualified retired judge in townships and centers of the provinces, the Head of the Judiciary, upon a request by the State Taxation Affairs Organization, shall recommend a practicing judge for membership in BSTD.
3. One representative from Iran Chamber of Commerce, industries and Mines or Chamber of Cooperatives or Society of Chartered Accountants or vocational associations or guilds or the city’s Islamic Council, upon the preference and choice of the taxpayer, if the tax assessment notice has already been served. However, if simultaneous with filing his objection to the tax assessment notice within the statutory respite, the taxpayer shall not notify his choice and preference for a representative from among the ones mentioned above, the State Taxation Affairs Organization shall proceed to appoint one representative from among those cited above, with due regard to the type of activity of the taxpayer or the subject of the taxation under consideration.
Note 1: The meetings of BSTD’s shall have a quorum with the presence of 3 members and the decisions adopted by a majority of votes shall be final and binding. However, the opinion of minority shall be duly recorded and registered in the text of the judgment.
Note 2: The responsibility of administration of the affairs relevant to the BSTD’s as well as the responsibility of holding the sessions of BSTD’s shall lie with the State Taxation Affairs Organization. The fee of the members of BSTD’s shall comply with the regulations which shall be proposed by the State Taxation Affairs Organization, to be subsequently approved by the Ministry of Economy and Finance, and shall be paid utilizing the credits which shall be allocated and duly stipulated in the budget of the said Organization for such purpose.
Article 245 : The representatives of the State Taxation Affairs Organization whom are members of the Board of Settlement of Tax Disputes (BSTD) shall be appointed from amongst the employees of the said Organization who already have at least 10 years of service in the said Organization and who have served at least 6 years of the said period in taxation works and who are knowledgeable and have expertise in taxation affairs.
Article 247 : Deleted.
Article 248 : Decisions of the Board of Settlement of Tax Disputes (BSTD) shall be rendered by giving explicit and justifiable opinion concerning the objection by the taxpayer and in case of deciding upon adjustment of the amount of taxable income, the reasons and grounds for such adjustment shall be mentioned in the judgment issued by BSTD.
Article 249 : The basis for calculation of tax by the Board of Settlement of Tax Disputes (BSTD) shall be mentioned in the judgment and in case a mistake(s) shall be made in calculation by BSTD, such mistake shall be corrected upon a request to this end by the taxpayer or by the Taxation Affairs Administration after investigation of the matter by BSTD.
Article 250 : In cases where the Board of Settlement of Tax Disputes (BSTD) shall declare the tax assessment notice to be void or shall adjust the assessment made by the Taxation Affairs Administration, BSTD shall be required to send a copy of its judgment together with a copy of the assessment sheet to the Tax Disciplinary Prosecutor in order that the offender shall be prosecuted in case a violation shall be established.
Article 251 : The taxpayer or the Taxation Affairs Administration shall be authorized, within one month after the date of notification of the final decision of the Board of Settlement of Tax Disputes (BSTD), to file a complaint with the High Council of Taxation by presenting adequate proofs and request for the reversal and annulment of the judgment and reexamination of the case, by invoking non-observance of the laws and regulations laid down or deficiency of investigation and examination.
Article 251 (BIS) : In the case of final income taxes, mentioned in the present Act as well as indirect taxation, which shall not be further examined by any other authority, and when a claim shall be filed by the taxpayer contending the unfair nature of such taxes, duly supported by sufficient documents and evidence, and requesting for review, the Minister of Economy and Finance shall refer the case for consideration to a board comprising 3 members as appointed by him. The vote of majority of the members of the said board shall be final and binding. The provisions of the present Act shall also apply to the turnovers for year 1989 up to the date of approval of the present Amendment.
Chapter 4: High Council of Taxation – Functions and Powers
Article 252 : The High Council of Taxation shall consist of twenty five (25) members who shall be appointed by the order of the Minister of Economy and Finance, upon their nomination by the Director General of the State Taxation Affairs Organization, among the individuals who shall be considered experts, knowledgeable and experienced in legal, economic, fiscal, accounting, and auditing affairs, holding at least a BA degree or its equivalent in the said fields of study.
Note 1: A minimum of 15 members of the High Council of Taxation shall be appointed from amongst the employees of the Ministry of Economy and Finance or from the organizations and departments affiliated to same, with at least 6 years of service in connection with taxation affairs.
Note 2: The meetings of the High Council of Taxation shall have a quorum with the presence of two-thirds (2/3) of its members, and its decisions shall be valid if adopted by 50% of its members plus one.
Article 253 : The term of office of the members of the High Council of Taxation shall be 3 years from the date of their appointment during which period they shall not be removed from their office except upon their own request or by a final order of the Special Administrative Tribunal referred to in Article 267 of the present Act. Upon the expiry of the above 3-year term, the members may be re-appointed. The president of the High Council of Taxation shall be appointed by the order of the Minister of Economy and Finance, upon a recommendation to be made in this regard by the Director General of the State Taxation Affairs Organization.
Article 254 : The High Council of Taxation (HCT) shall have eight benches. Each bench shall have three members. The chairman and members of each bench shall be appointed by the president of the HCT.
Article 255 : The functions, duties and powers of the High Council of Taxation (HCT) shall be as follows:
1. To draw up and prepare the regulations and circular letters related to the implementation of the present Act, in cases as referred and assigned by the Minister of Economy and Finance or the Director General of the State Taxation Affairs Organization, or in cases where HCT shall find it necessary to have certain regulations and/or circular letters prepared and recommended to the Director General of the State Taxation Affairs Organization.
2. To review and conduct studies for the purpose of expressing opinion concerning the implementation of taxation laws and regulations, and also to submit recommendations either to the Minister of Economy and Finance or to the Director General of the State Taxation Affairs Organization, for amending or modifying taxation laws and regulations or deletion of some regulations.
3. To comment on taxation matters and problems which may be referred to the HCT by either the Minister of Economy and Finance or the Director General of the State Taxation Affairs Organization, for advice and comments as and when deemed necessary by the said Minister or Director General.
4. To examine the final verdicts and judgments pronounced by the Board of Settlement of Tax Disputes where a complaint shall be filed against them either by the taxpayer or by the Taxation Affairs Administration on the ground of their inconsistency with the statutory laws and regulations or deficiency of investigation and examination.
Article 256 : When a complaint shall be received, within the statutory respite, from the taxpayer or the Taxation Affair Administration, against the final decision of the Board of Settlement of Tax Disputes (BSTD), supported by evidence and documents, explicitly or implicitly alleging the violation of statutory laws and regulations or deficiency in investigations and examinations, the president of the High Council of Taxation (HCT) shall refer the complaint for examination to one of the HCT benches. The examining bench shall, without dealing with the substance of the case, consider the matter in order to find out whether the decision by BSTD conforms to the legal formalities and procedures and to the pertinent rules and regulations and then, on the basis of legal grounds and evidence, shall issue a verdict either reversing the decision by the BSTD or dismissing the complaint. The said verdict shall be issued by a majority of votes and the opinion of the minority shall be duly recorded and registered in the text of the verdict.
Article 257 : When the decision referred to a bench of the High Council of Taxation (HCT) shall be reversed, the case shall be referred to another Board of Settlement of Tax Disputes (BSTD). If there shall be only one BSTD in the location concerned, the case shall be referred to the BSTD in the nearest town in the same province. The latter BSTD shall investigate the case again in conformity with Chapter 3 of the present Book and shall issue an appropriate verdict by consideration of the opinion of the HCT. The verdict issued in the above manner shall be final and binding. The same provisions shall apply to the verdicts issued by the BSTD which may be reversed and quashed by the Administrative Justice Tribunal.
Note: In cases where the verdicts issued by the BSTD shall be reversed by the HCT, a copy of the verdict of BSTD shall be sent to the Tax Disciplinary Prosecutor by the HCT for his consideration, with a view to prosecute the case if it shall be established that an offense was committed.
Article 258 : In cases where different and varied procedures shall be applied in connection with identical cases by the benches of the High Council of Taxation (HCT), as assigned and referred by the Minister of Economy and Finance or by the Director General of the State Taxation Affairs Organization or by the President of HCT; the Full Bench of the High Council of Taxation shall convene a meeting, to be attended by the President of HCT as well as the heads of the benches, and in the absence of a head of a bench, a member of HCT who shall be appointed by the HCT President, in order to examine and review the matter of dispute, to adopt an appropriate decision and issue a verdict. Under such circumstances, the verdict issued by the Full Bench of the High Council of Taxation, which shall be approved by two- thirds (2/3) of its members, shall be binding and obligatory on the benches of HCT as well as the Board of Settlement of Tax Disputes (BSTD) under identical and similar circumstances.
Article 259 : Where the complaint against the decision of the Board of Settlement of Tax Disputes (BSTD) shall be filed by the taxpayer, and if the taxpayer shall deposit an amount in cash or as a bank guarantee or estate security equal to the amount of tax specified in the said decision, or if he shall present a guarantor acceptable to the Taxation Affairs Administration, the BSTD’s decision shall be suspended pending the issuance of a verdict by the High Council of Taxation.
Article 260: Deleted.
Chapter 5: High Tax Disciplinary Board – Powers
Article 261 : The High Tax Disciplinary Board (HTDB) shall consist of 3 principal members and 2 alternate members who shall be appointed upon a recommendation by the Director General of the State Taxation Affairs Organization, by the order of the Minister of Economy and Finance, from amongst the senior officials of the Ministry of Economy and Finance, well conversant with tax affairs and having a minimum service record of 16 years with at least six years in positions dealing with tax affairs. The term of office of the members of the HTDB shall be 3 years during which period they shall not be removed from their office except at their own request or by the final order of the Special Administrative Tribunal referred to in Article 267 of the present Act. At the end of the 3-year term, the members may be re-appointed. The Chairman of the HTDB shall be appointed by the order of the Minister of Economy and Finance, upon a recommendation by the Director General of the State Taxation Affairs Organization, from amongst the principal members.
Note: The employees who shall pass through the stages referred to in Article 220 of the present Act, and who have already served in one of the provinces (excluding Tehran) in the position of director general shall have priority in being appointed to the above position.
Article 262 : The functions and powers of the High Tax Disciplinary Board shall be as follows:
a. To deal with the administrative offenses of tax officers and the representatives of the State Taxation Affairs Organization in BSTD and 3-member boards described in Clause (3) of Article 97 of the present Act as well as the individuals who perform the duties of the said officials in addition to carrying out their own duties upon instruction by the Tax Disciplinary Prosecutor. Prosecution and looking into cases referred to the former Tax Prosecutor’s Office and the High Tax Disciplinary Board shall he undertaken by the authorities mentioned in this Chapter.
b. To disqualify, at the request of the Tax Disciplinary Prosecutor, the above mentioned officials from continuing their service in tax affairs on moral grounds or for actions or conduct which shall be found contrary to the prestige of tax officials or for ill reputation and negligence in carrying out their duties.
c. To verify the complaint of any officer whose competence shall not be confirmed by the Tax Disciplinary Prosecutor.
Chapter 6: Tax Disciplinary Prosecutor – Duties and Powers
Article 263 : The Tax Disciplinary Prosecutor (TDP) shall be appointed, upon a recommendation by the Director General of the State Taxation Affairs Organization, by the order of the Minister of Economy and Finance from amongst senior officials of The Ministry of Economy and Finance who shall have at least 10 years of service, 6 years of which spent in connection with taxation affairs.
Note: It shall be authorized for TDP to have sufficient number of assistants; accordingly a part of the powers of TDP shall be granted to the said assistants.
Article 264 : The duties of the Tax Disciplinary Prosecutor (TDP) shall be as follows:
a. To detect and deal with the offenses and failures committed by tax officers and/or the representatives of the State Taxation Affairs Organization who are members of the Boards of Settlement of Tax Disputes, as well as the members of 3-member boards described in Clause 3 of Article 97 of the present Act and other officials responsible for collection of taxes in accordance with the provisions made in the present Act, as well as any individual who shall perform the duties of the said officials in addition to his/her own duties, and to prosecute the said officials.
b. To investigate about the reputation, actions and conduct of the above-said officials.
c. To express opinions concerning the promotion of tax officers and the representatives of the State Taxation Affairs Organization who are members of the Board of Settlement of Tax Disputes.
d. To bring legal action against taxpayers and tax officials in cases prescribed in the present Act.
Article 265 : Inquiry and investigation shall be initiated on the following basis:
a. Complaints filed by the interested party in respect of non-observance of the provisions stipulated in this Act.
b. Reports received from official authorities.
c. Cases referred by the Minister of Economy and Finance or the Director General of the State Taxation Affairs Organization or the High Tax Disciplinary Board.
d. Cases directly observed by or brought to the notice of the Tax Disciplinary Prosecutor (TDP).
Note: The Tax Disciplinary Prosecutor shall look into the above cases received by him and, as the case may warrant, shall either file it, or issue a non-prosecution order (acquittal) or prepare an indictment and submit it to the High Tax Disciplinary Board. Also, in cases where acquittal shall be issued, the matter shall be notified to High Tax Disciplinary Board which shall take direct action in cases where it shall not deem the said acquittal to be in compliance with the issue.
Article 266 : The competent body to deal with offenses mentioned under Article 262 (a) shall consist of two members of the High Tax Disciplinary Board (excluding the Chairman) and one member of High Council of Taxation as nominated by the Council’s Chairman. The said authority shall examine the cases referred to it in accordance with the provisions of this Act, those of the Law or Examination of Administrative Offence and other statutory regulations, and shall issue a verdict either condemning or acquitting the accused. The said verdict shall be appealable by the accused and the by the Tax Disciplinary Prosecutor, within 10 days from the date it is served. The Appellate Body shall consist of 3 members, namely the Chairman of the High Tax Disciplinary Board, the Chairman of the High Council of Taxation and a member of the High Tax Disciplinary Board nominated by the Chairman of the said Board who did not have a role in issuing the initial verdict. The verdict issued by Appellate Body shall be final and binding.
Note 1: In cases where a member of the High Tax Disciplinary Board (HTDB), whether in the first instance or appellate proceedings, shall have a record of issuing a judgment or giving an opinion with regard to the subject matter, the Minister of Economy and Finance shall appoint another individual to this end, as the case may be.
Note 2: In cases where the verdict of the reviewing authority shall be cancelled by the Administrative Justice Tribunal or if the case shall be assessed to be worthy of reconsideration, the matter shall be referred solely on the grounds stated by the said Tribunal to a board comprising three members appointed by the Minister of Economy and Finance, with one of them being the Director General of the State Taxation Affairs Organization. The verdict of the said board shall be final and binding.
Article 267 : Disciplinary infringements by the members of the High Council of Taxation and those of the High Tax Disciplinary Board shall be dealt with, on the instructions of the Minister of Economy and Finance, in the Special Administrative Tribunal composed of a judge of the Supreme Court nominated by the President of the said Court, the President of the General Accounts Tribunal and the Director General of the State Taxation Affairs Organization. Such disciplinary infringements shall be considered and examined in conformity with the Law on Consideration of Administrative Infringements as well as other relevant rules and regulations, and the acquittal or conviction judgment shall be duly pronounced. Such judgment and verdict shall be final and binding.
Article 268 : In cases where under taxation rules and regulations notaries public shall be required to discharge certain duties in connection with the transactions effected through them, if they shall fail to do so, they shall be prosecuted by the Tax Disciplinary Prosecutor. The offending notaries public shall be tried and punished by the competent body mentioned in the Notary Public Offices Act. However, the Tax Disciplinary Prosecutor shall be authorized not only to file an indictment but also to assign a representative of the Taxation Affairs Administration at his disposal to attend the sessions of the afore-said body in order to give the necessary explanations.
Article 269 : Infringements of the judges who are members of the Board of Settlement of Tax Disputes (BSTD) arising from the discharge of duties to be carried out by the BSTD under taxation rules and regulations shall, upon being indicated and notified by the Tax Disciplinary Prosecutor, be investigated by the judges’ Disciplinary Prosecutor’s Office. The Courts of Justice, upon indictment by the Tax Disciplinary Prosecutor, shall investigate infringements by retired judges as well as the representatives mentioned in Clause 3 of Article 244 of the present Act, and they shall be sentenced to appropriate punishments.
Article 270 : The punishments laid down for offenses committed by tax officers and the representatives of the State Taxation Affairs Organization member of Board of Settlement of Tax Disputes in the following instances shall be as follows:
1. If, after a tax assessment shall become final and not subject to protest, it shall transpire that the tax officers or the representatives of the State Taxation Affairs Organization member of the Board of Settlement of Tax Disputes assessed the taxpayer’s income more or less than the actual Income, either intentionally or neglectfully, without taking into consideration the documents and evidence submitted by the taxpayer or making adequate queries, in addition to being liable for the losses incurred as determined by the High Council of Taxation, they shall be sentenced to administrative punishment, the minimum of which shall be 3 months and the maximum of which shall be 5 years of suspension from the government service.
2. In cases where the tax due by taxpayers shall become time-barred or shall be rendered non-collectible, in case of such declarations which are not required to be examined in accordance with the provisions set forth in Article 198, owing to failure or negligence of the tax officers, the offender shall, by virtue of the verdict of the High Tax Disciplinary Board, be removed from taxation service and sentenced to appropriate punishment corresponding to the gravity of the case, as prescribed in the Law of Administrative Offenses. The offending official shall also have financial liability for the amount of the loss sustained by the government (as determined by the High Council of Taxation), and as such the Tax Disciplinary Prosecutor shall sue him for damages in the civil courts of law. If the offending official shall be suspected of having bad intention, the Tax Disciplinary Prosecutor shall bring criminal charges against him. The tax officers, who shall proceed to re-open a tax case, shall be sentenced, by virtue of the verdict of the High Tax Disciplinary Board, to dismissal from government service for a period ranging from one to four years. Where such officials submit false reports on tax matters and thus intentionally cause the prosecution of taxpayers who are in fact not at fault, shall be tried by courts of law and sentenced to imprisonment for a term ranging from 6 months to 2 years. The courts shall give priority to hearing such cases. The rules set forth above shall be applicable to the tax officers who, in case of the instances mentioned in Articles 156, 227 and 239 of the present Act, generally after the issuance of the tax assessment notice, at any stage, shall demand tax in respect of other activities of the taxpayer, whether that being of the same type or otherwise, without having acquired the necessary supporting documents, or such demand shall be made beyond the statutory period of respite in respect of the subject-matter of Articles 156 and 157 respectively.
Note: The procedure for trial and punishment of those charged with the above offenses shall, except where special provisions are stipulated for them under the present Act, be subject to the procedures laid down by the Law of Administrative offenses.
Article 271 : In case of rejection of the statutory accounts books and documents of a taxpayer, where the 3 member Board, described under Clause (3) of Article 97 of the present Act, shall reverse more than one fifth (1/5) of the opinion of the Taxation Affairs Administration (with due regard to the extended periods) within one fiscal year, the relevant officials being in charge of taxation shall be removed from taxation service for a period of one year. However, in case of repetition, they shall be permanently removed from the rank of taxation officer.
Article 272 : The Auditing Organization of Islamic Republic of Iran, the chartered accountants and the auditing institutes member of the Chartered Accountant Society, which are in charge of duties including auditing, legal inspection or auditing of the entities, shall be required, if so requested by the said entities, to draw up and prepare a Taxation Auditing Report in conformity with the sample form which shall be provided by the State Taxation Affairs Organization, and put the same at the disposal of the taxpayers in order that they submit such reports to the Taxation Affairs Administration concerned. The said report shall include the following:
a. Making comments as for the sufficiency of the accounting documents, vouchers and evidence for auditing purposes, in conformity with the provisions laid in the present Act as well as the applicable rules and regulations, duly observing the accounting criteria, principals and standards.
b. Determination of the taxable income on the basis of the provisions made in the present Act as well as the relevant rules and regulations.
c. Making comments as for withholding taxes which, by virtue of the Law, the taxpayer is required to deduct and duly pay the same to the State Taxation Affairs Organization.
d. Other instances and cases as specified in the sample Taxation Auditing Report by the State Taxation Affairs Organization.
Note 1: The Taxation Affairs Administration shall accept the Taxation Auditing Report without further review and examination and shall proceed to issue the tax assessment notice in conformity with the applicable regulations. However, the Taxation Auditing Report shall be accepted only if, when submitting the Taxation Auditing Report to the relevant Taxation Affairs Administration, the taxpayer shall attach to the said Report, the fiscal auditing report in respect of the financial statements drawn up and prepared, according to accounting standards by the same chartered accountant or the auditing institute, simultaneous with submission of the tax return, or maximally within 3 months after the date of expiry of the respite laid down for submission of the tax declaration.
Note 2: The State Taxation Affairs Organization shall be authorized to assign to the chartered accountants or auditing institutes, the responsibility of auditing of the financial statements and preparation of taxation reports required by the natural persons and legal entities. In this case, the relevant fees shall be paid, in conformity with the applicable rules and regulations, by the State Taxation Affairs Organization.
Article 273 : The present Act shall take effect as of the beginning of Iranian year 1381 (March 21, 2002). Accordingly, the legal entities whose fiscal year commences after Farvardin 1, 1380 (March 21, 2001), shall be subject to the present Act with regard to the manner of consideration and taxation rate. As of the date of enforcement of the present Act the laws and regulations standing contradictory to the present Act, excluding the tax provisions laid down and prescribed in the Law on the Third Economic, Social and Cultural Development Plan of Islamic Republic of Iran, in force during the period of implementation of the said Development Plan, as well as Article 13 of the Law on the Administration of Free Trade-Industrial Zones of Islamic Republic of Iran, approved on August 28, 1993 (7.6.1372), and the Interpretation ratified on April 9, 1995 (21.1.1374) in connection with the latter Law, shall be considered null and void. The same provision shall apply to the contrary and inconsistent laws and regulations that the applicability of the general laws and regulations thereto requires mentioning or reiterating their name or title.