Section 2 (Property Tax)

Out of the inheritance allocated to each tier one heir, thirty million (30,000,000) will be tax exempt. However, any amount higher than thirty million rials will be subjected to the tax rates mentioned above. In the case of tier one heirs that are under the age of twenty, are injured, or are disabled and unemployed, an amount of fifty million (50,000,000) rials will be exempt from tax.

Article 21: Any property which may be left for the heirs after the death of a person and which

may be expropriated by virtue of special laws or judgments and is given to the control of ministries, government organizations, municipalities, Islamic Revolution institutions, or companies for which 100% of shares are owned by the government, within one year after the final assessment of taxes, shall not be subject to inheritance tax. If any compensation shall be paid in lieu of such expropriation, the value of the compensation or that of expropriated properties, whichever is less, shall be subject to taxation. Any excessive amount collected as taxes shall be reimbursed. The provisions made in Article 21 shall also apply to the cases where the heirs shall gratuitously transfer the whole or any part of the property, left as inheritance, to any of the juridical entities mentioned in Article 2.

Article 22 : In the event a debt that was owed to the deceased individual is voted by the Settlement of Tax Disputes as uncollectable, the debt is not counted as part of the deceased’s assets. If tax was already collected on the mentioned debt, the amount taxed will be returned. If the debt was collected by any of the heirs, those individuals will be responsible for payment of tax. In either case, the Ministry of Economic Affairs and Finance s shall be authorized, in all

instances, to participate in the legal proceedings pertaining to realization of the above

claims as a third party member, or take direct action to institute the claims

Article 23: no longer exists.

Article 24 : The properties listed below are exempt from the tax laws mentioned in this chapter:

1. Amounts in respect of pension, stipend, savings in connection with service, service

severance benefits, claims relevant to dismissal damages, severance pay, unutilized due

leave, social insurance as well as any amounts paid by insurance companies, underwriters  and/or employers such as life insurance benefits, death compensation, blood money which may be paid to the heirs in a lump or in separate payments.

2. Movable property belonging to the individuals mentioned in clause 4, article 39, Vienna Convention, April 1961, and Article (51), Vienna Convention, May 1963, and clause (4), Article (38), Vienna Convention, March 1975, with respect to the conditions established in the mentioned convention under the condition of mutual agreement.

3. Property that has been donated or gifted to organizations and institutions mentioned in Article (2) of this law under the agreement of the mentioned organizations and institutions.

4. Eighty percent (80%) of bonds and deposits of the deceased with Iranian banks and their branches abroad and other non-banking credit institutions. As well as, fifty percent (50%) of the total value of the deceased individual’s stocks in companies where their stocks are recognized by the exchange market, and forty percent (40%) of the value of the deceased individual’s belongings in units of production, industrial, mineral and agricultural.

Article 25 : First and second tier inheritors of the property of the martyrs of the Islamic Republic are not subjected to the inheritance laws mentioned in this chapter.

Martyrdom for the use of these provisions require the verification of one of the Armed Forces of the Islamic Republic of Iran or the Martyrs Foundation of Islamic Revolution.

Article 26 : The heirs (individual or collective), or their guardians, trustees, or legal representatives, are required to submit an official statement, prepared according to the sample statement of the State Taxation Affairs Organization six months after the date of the death. The statement must include all items in the inheritance, as well as their determined price at the time of death, explanation of all debt that can be calculated based on the provisions listed in this chapter, and be submitted to one of the appropriate financial affairs offices based on the regulations listed below:

1. Certified copies or photocopies related to the credits and liabilities of the deceased.

2. Certified copies or photocopies of all deeds, or legal papers in respect to the belongings of the deceased.

3. In the case that the statement was released by a lawyer, a guardian, or a representative, certified Power of Attorney or a certified copy of the Letter of Guardianship is necessary.

4. Certified copies or photocopies of the last will of the deceased, if a will exists.

Note: The submission of the statement based on the specifications listed above by one heir is adequate. Therefore all heirs are not required to submit an individual copy of the statement.

Article 27 : The Taxation Affairs Administration authorized to deal with the inheritance tax of the deceased shall be the one in which area of jurisdiction the last domicile of the deceased was situated. If the deceased was not domiciled in Iran, the Taxation Affairs Administration in Tehran shall be authorized to receive the declaration.

Note: Domicile mentioned in this law is dependent on the definition of a domicile in the Civil Code of Iran.

Article 29 : The State Taxation Affairs Organization , for the purpose of the proper implementation of tax laws on inheritance, is required to establish the central office of inheritance in Tehran. The Taxation Affairs Administrations are required to send all incoming statements to the aforementioned central office within one week after their receipt. The central office will record and stamp the statements, and, for the purpose of carrying out further legal actions, return all documents to their appropriate offices within one month.

In the case that multiple statements have been released for a single deceased individual, the central office will return all documents to the financial affairs office that the first statement was received from and notify all other offices concerned accordingly.

Article 30 : The Taxation Affairs Administration is required to assess all incoming statements of taxpayers, in compliance with the provisions mentioned in this law, and record the value of assets based on information given below:

A. In the case that the difference in total value of assets subjected to tax in the statement and the value that the Taxation Affairs Administration has calculated is not greater than fifteen percent, the statement will be considered final and the decision of the case will be communicated to the taxpayer within six months.

B. In the case that the difference in value is greater than fifteen percent, or if the heirs, legal representatives, or any other individuals that based on the provisions mentioned in this law are required to file a tax statement have neglected to file a statement, or have excluded part of the assets in the statement, the Taxation Affairs Administration will calculate the appropriate amount of tax based on the provisions mentioned in this law and notify the taxpayer of its findings.

Note: In the case that the heirs have failed to file a statement within a month after written notification from the Taxation Affairs Administration, the administration will take direct measures for the purpose of finding the value of the assets.

Article 31 : The Tax Affairs Administration shall, after submission of the tax declaration  by the heirs or their legal representative, and upon their written application, issue and  hand over to the taxpayer, within one week, a certificate containing a certified copy of  the items of the property stated in the declaration. This certificate is only valid regarding the issuance of a probate. The courts shall be authorized to accept an application (plaint) for issuance of probate only in the case the certificate set forth in this Article is submitted to the court. Court supervisors of the office responsible for the issuance of probate documents are required to send an official copy of the documents to the local Taxation Affairs Administration within fifteen days after their issuance.

Article 32 : The trading value of a possession, whether property or a notable estate, will be evaluated with respect to note (1) Article (59) of this law at the time of death. The value of all other assets and financial belongings of the deceased will also be calculated at the time of death.

Note 1 – Furnishings located in the place of residence will not be calculated in the assets of the deceased as taxable figures.

Note 2 – In the case that the value of a estate is difficult to calculate due to the building’s extraordinary value in regards to the building materials or architectural techniques used, the office of financial affairs is required to seek the expertise of specialists or experts. Specialists should also be used in the evaluation of rare jewelry and objects.

Note 3 – In the case that benefits made on an asset are used towards a will, an alms, or have been retained; at the time of the expiration of the will or retention, the original asset(s) will be distributed amongst the heirs who will then be subjected to the payment of tax on the acquired inheritance.

Note 4 – A law that causes contractual rent to be vested in the possession of banks in regards to any property or other notable estate will be calculated as part of the transactional value of the deceased.

Article 33 : within three months of receiving notification of the death of an Iranian national, Iranian consular officials abroad are required to report details and values of all items pertaining to the deceased’s estate existing in the consular’s assigned country (both movable and immovable property) to the Ministry of Economy and Finance through the Ministry of Foreign Affairs.

Note: The executive by- laws of this Article shall be prepared by Ministry of  Economy and Finance and the Ministry of Foreign Affairs and shall be approved by the  Council of Ministers.

Article 34: Banks, organizations, institutions, and individuals that possess any property belonging to the deceased are required to release a statement of assets, whether cash, promissory notes, jewelry, bonds, or company shares, and present the information to the local Taxation Affairs Administration within a month after the official notification of the death of the individual; furthermore, they shall also be required to place the necessary books and documents at the disposal of the Taxation Affairs Administration for examination.

Article 35: When the Registrars of Deeds and Property (RDP) registers an immovable  property in the name of heirs, legatees, or all notaries public, at the time of registering  an agreement concerning the partition of estates or any transactions by the heirs in respect  to the estates, shall demand a certificate from the competent Taxation Affairs  Administration to the effect that the applicable tax has been paid in full, or that the  required security has been deposited or that the necessary arrangement has been made for  payment thereof.  The RDP shall not register such transfers or partitions before the said  certificate is produced and presented to them.

Article 36 : Banks, companies, institutes and individuals who hold cash, promissory notes,  jewels, shares, contributions to capitals, or any other type of property that belonged to the deceased will not be authorized to relinquish or register these items in the name of the heirs or executors unless the certificate mentioned in the latter part of Article 35 of this law is presented.

Article 37 : In the case that, based on court ruling on the financial rights of the deceased, the heirs receive any property, the court supervisor/clerk is required to send a copy of the court order/judgment to the Taxation Affairs Administration so that in case the tax on the property has not yet been collected the Taxation Affairs Administration could collect the appropriate amount. This ruling also applies to new documents concerning the finances/assets of the deceased. In the case that after finalization of tax, new documents are found concerning the debts of the deceased, or revealing that a property does not belong to the deceased, and in the case that these new findings will change the calculations of inheritance tax, the file will be sent to the Board of Settlement of Tax Disputes for the proper course of action.

Article 38 : Property that is transferred through endowment, will, entailment, or donation will be taxed in the manner listed below unless it falls under the cases of exemption described under sub-clause 3 of Article 24 or under the chapter pertaining to windfall earnings:

a. In the case of endowment and entailment, the yearly profit derived from the estate shall be taxed according to Article 131 of this law.

b. In the case of donation and/or will, as long as the profits gained from the estate are subjected to a donation or will, action will be taken according to clause (a) mentioned above. In the case that the estate itself is the subject of a donation and/or will, the value of the estate will be determined based on the laws mentioned in this chapter and the total value will be taxed at the rates determined for the second degree heirs.

Note 1: Property listed in a will will be subjected to tax will only as a result of the death of the testator.

Note 2: The Taxation Affairs Administration that will be considered qualified to deal with inheritance tax in the cases of endowment, entailment, donation, or will is the one that is located in the area of jurisdiction where the trustee, entailer, donator, or testator resides. In the case that the mentioned individuals are not Iranian residents, the qualified Taxation Affairs Administration shall be the one located in Tehran.

Note 3: Official notaries-public, registrar of deeds agencies, courts of justice, Hadj organization, endowment and charitable organizations, Guardianship Office (the organization responsible for the care of juveniles and injured), as well as banks and other organizations are not required to execute a will unless a certificate is produced from the local Taxation Affairs Administration depending on if the testator or the heirs have submitted the will to a competent Taxation Affairs Administration.

Article 39 : The trustee with respect to endowment, the entailer or the donator with respect  to entailment or oblation, and the testator with respect to the will, are required to file a statement based on the sample statement of the State Taxation Affairs Organization and submit the document to the local Taxation Affairs Administration, whereby a receipt will be presented. This statement is to include the specifications and the value of assets that are subjected to endowment, entailment, donation, or a will and to include all the respective/relevant documentations and be submitted no longer than three months after the occurrence of the agreement or the death of the testator. In instances where the case is subjected to clause (a) of Article 38 of this law, the taxes on annual profits shall be paid up to the end of the month of Tir (July 22) of the subsequent year’s end. If the case is subjected to the latter part of Clause (b) of the Article 38, the applicable taxes should be paid no later than three months after the expiration of the submission of the statement or the facilities mentioned in Articles 40 or 41 of this law need to be used.

Note: In cases where the endowment, entailment, donation, or will shall be subject to  Clause (3) of Article 24 of this law, or where the issue shall be subject to provisions of  the chapter on windfall earnings; the trustee, entailer, donator, or the testator are required to file a tax declaration with the local Taxation Affairs Administration within three months after the date of signature of the contract or the death of the testator whereby a receipt will be presented. This statement is to include the specifications and the value of assets that are subjected to endowment, entailment, donation, or a will and the specifications of the beneficiaries and be prepared based on a sample statement of the Ministry of Economic Affairs and Finance.

Article 40 : If persons liable to tax under this Chapter are unable to pay all or part of  their taxes, the State Taxation Affairs Organization shall be authorized to agree to  payment by installment, as long a valid guarantee is obtained, over a period not exceeding three (3) years from the date of finalization of the applicable tax. In case the heirs shall not be able  to provide a guarantee or arrange payment by installment, they may then act according to  Article 41 of this law.

Article 41 : The State Taxation Affairs Organization shall be authorized, with the written  request of the heirs, to accept in lieu of the taxes a movable or immovable property whose value shall be equal to amount of taxes from among the estate of the deceased as agreed upon by the heirs. The value of the property shall be determined on the same basis used for calculation of the estate of the deceased. This Article is only applicable if part of the assets of the deceased is not compromised of cash.

Note: In the case that according to this Article a property is accepted in exchange for payment of tax, the transfer of the property to the Ministry of Economy and Finance will not be subjected to any form of tax.

Article 42 : In the case that part of the property of the deceased includes a factory, a manufacturing plant, or an agricultural unit and the value of the rest of the assets of the deceased are insufficient to cover the applicable inheritance tax; after the collection of part of the inheritance tax from the rest of the deceased’s assets the State Taxation Affairs  Organization is required to accept an installment plan, as per the request of the heirs, in order for the remainder of the taxes to be paid. An installment plan also applies in cases where a factory, a manufacturing plant, or an agricultural unit is the only asset left by the deceased.

Article 43 : In the case that banks, companies, institutes, or individuals who have a property of the deceased in their belonging and violate the provisions made in Articles 34 and 36 of this Act, not only will they have joint liability with the heirs with respect to the payment of taxes and penalties, but they will also be subjected to fine equal to five percent of the value of the property in their belonging. In the case of banks, state-owned enterprises, and public agencies, the violators, their partners, and any individuals who assisted the violators will have joint responsibility in the mentioned violation.

Article 44 : For every sheet of checks that is printed by banks, two hundred rials (200 Rls) will be collected as stamp duty.

Article 45 : Stamp duty will be collected on the following papers in accordance to their value in the amount of three per million (0.003):

1. Bills of exchange

2. Promissory notes and other similar papers

Note: The stamp duty established in this Article in regards to amounts below one thousand rials will be the same as the stamp duty subjected to amounts equal to one thousand rials.

Article 46 : A five thousand (5000) rials stamp duty will be collected for all transferable commercial documents that have been issued, negotiated, or utilized in Iran (Excluding the documents mentioned in Articles 45 and 48 of this law) and documents signifying the ownership of merchandise, such as bills relating to marine and air lading, and merchandise insurance policies. A pne thousand (1000) rials stamp duty will be collected on bills relating to land lading and shipping certificates. Transportation institutes and companies are responsible for providing an accurate bill of lading and are required to include the correct identity and address of the owners of merchandise. All other relevant information should also be included in the bill of lading. Transportation institutes and companies will also be responsible for the safekeeping of the copies of the documents mentioned above for at least five years after the date of their issuance.

Note: Stamp duty will be collected from the documents listed below based on the following explanations established in this note:

1. For the issuance of a military exemption certificate, for whatever reason it has been issued, ten thousand (10,000) rials will be collected.

2. For all types of international driving licenses, fifty thousand (50,000) rials will be collected.

3. For all transit plates for any kind of vehicle, and also for issuance of a plate for any vehicle that has been imported to the country on a temporary basis, two hundred thousand (200,000) rials will be collected.

4. For the validation/renewal of a driver’s license on all types of vehicles, one thousand (1000) rials will be collected.

5. For the report card or certificates of primary, intermediary, and secondary students, one thousand (1000) rials will be collected.

6. For college certifications, professional degrees, doctorates, and all other higher education certificates, ten thousand (10,000) rials will be collected.

7. For the evaluation of all foreign school certificates gained at a primary, intermediary, or secondary level, twenty thousand (20,000) rials will be collected.

8. For all foreign school certificates gained at a technical, professional, or higher educational level, fifty thousand (50,000) rials will be collected.

9. For a midwifery license, educational records during internships/residencies, including dentistry internships, twenty thousand (20,000) rials will be collected.

10. For physician, dentists, paramedical/mid-level professional, veterinarian, and pharmacologists licenses, hundred thousand (100,000) rials will be collected.

11. For the issuance of the certificate and ID cards for the establishment of production and mining units, business or commercial certificates, lawyer and professional licenses, and licenses relating to all other professions, one hundred thousand (100,000) rials will be collected for the issuance and fifty thousand (50,000) rials will be collected for the renewal of all the mentioned licenses.

Article 47 : Based on the provisions listed below, ten thousand (10,000) rials will be collected as stamp duty from all contracts and all similar documents between banks and their clients which are exchanged or undertaken by the clients, in the case that the exchanges/documents are not registered with the notaries-public:

1. Certificate of acceptance of the general conditions of a checking account

2. Loan contracts, educational grants of all types, and contractual documents and forms that banks supply to their clients during the time of transaction for review and signing.

3.  Contracts relating to all types of deposits in Certificate of Deposit (CD) accounts.

4. Power of attorney forms that have been arranged in banks in order for a client to transfer his/her right of signature to another person.

5. Other contracts that have been concluded between banks and clients where the parties involved have accepted certain obligations or responsibilities that will take place based on the provisions mentioned in this Article.

6. Any warranties issued by banks.

7. The request of the issuance of a warranty, in the case that the request is accepted by the bank and the request is issued.

8. The request of opening a credit line inside Iran or abroad, in the case that it is accepted by the bank and the credit line has been opened.

Article 48 : The shares and contributions of all Iranian companies discussed in the Commercial Code of Iran, excluding cooperative companies, will be liable for stamp duty according to the face value of the shares and contributions at the rate of two per million. Amounts below one hundred (100) rials will be considered at the same rate as if they are one hundred (100) rials.

Note: The stamp duty on shares and contributions of companies must be paid within two months of the legal registration of the company with the Registrar of Companies Office. In the case of an increase in company capital and additional shares from the date of the company’s registration, the additional capital recorded at the Registrar of Companies Office will be paid by the cancellation of stamps. The increase of capital in regards to the companies that had decreased their capital in the past, to the extent that the stamp duty on the capital has been paid for, will not again be liable for the payment of stamp duty.

Article 49 : In the case that the mentioned documents liable for stamp duty as covered in Articles 45, 46, 47, and 48 of this law have been issued in Iran, the issuers of the documents are responsible for the placement and cancellation of the appropriate stamps on each document. In the case that the mentioned documents have been issued abroad, the first person in Iran that takes possession of the above documents must act in the way mentioned above prior to any signature, whether for the purpose of an endorsement, transaction, acceptance, or any form of payment. Furthermore, all institutions and individuals that negotiate, receive, or pay for the mentioned documents in Iran will be jointly responsible for the payment of the applicable stamp duty.

Article 50 : The Ministry of Economy and Finance is authorized to copy and place at the disposal of applicants promissory notes, bills of exchange, bills of lading, and other documents liable to stamp duty. The Ministry of Economy and Finance is authorized, whenever it deems appropriate, instead of the attachment and cancellation of stamps, to assign tax for receiving stamp duty against issuance of receipt.

Article 51 : In the case of a violation of the laws of this chapter, the violator, in addition to the amount of the stamp duty, will be fined an amount double the value of the original stamp duty.