Iran International Tax and Transfer Pricing Review
Information current to: 27 September 2026
Currency and tax year: Iranian rial (IRR); tax period generally follows the Iranian year, subject to the taxpayer's applicable accounting period.
Executive summary
Iran's Direct Taxes Act provides a general 25% corporate income-tax rate under Article 105. Article 107 separately sets a withholding-based method for specified Iranian-source income of non-resident persons, using deemed taxable-income ratios that vary by activity. Treaties may modify domestic treatment where applicable. The materials reviewed do not establish a comprehensive, published statutory transfer-pricing regime with a verified INTA instruction, prescribed methods and documentation thresholds. Article 107 should not be mischaracterized as such a regime.
The official consolidated Direct Taxes Act is available in Persian. English-language source coverage is limited, and certain secondary explanations are not authoritative. Confirm the current Persian legal text, the implementing rules relevant to Article 107, treaty status and any administrative instructions with Iranian counsel before relying on a transaction-specific conclusion.
1. Legal framework and scope
The principal statute is the Direct Taxes Act (قانون مالیاتهای مستقیم), as amended, administered by the Iranian National Tax Administration. Article 105 establishes the corporate income-tax framework; the statutory general rate is 25%, subject to special provisions, exemptions and other rules. Article 180 addresses foreign-tax credit relief, and Article 168 provides for tax agreements with other states. Treaty application depends on the specific instrument and facts. This review is limited to corporate income tax, international tax and transfer pricing; indirect taxes, foreign exchange, sanctions, customs and individual tax are not analyzed.
Article 107 addresses income earned in or from Iran by non-resident individuals and legal persons, including contractors and providers of specified technical, engineering, training, licensing and other services. It uses statutory deemed-income ratios (10–40% of amounts received, depending on activity and profitability), with tax withheld by the payer. The Executive Regulation under Article 107 provides implementation detail. This gross-payment/deemed-profit mechanism is distinct from a general passive-income withholding table.
2. Permanent establishment and taxable nexus
The Act's taxation of foreign persons and local business activity must be considered with Article 107, the relevant income provisions and any applicable treaty. The materials reviewed do not support a comprehensive English summary of all domestic PE tests. Assess branches, agents, project activities, personnel and contract income under the current Persian text; treaty PE definitions may constrain domestic taxation. Obtain local advice before treating a presence as non-taxable.
3. Withholding tax and cross-border payments
| Payment | Domestic position identified | Treaty and practical point |
|---|---|---|
| Dividends | No general non-resident dividend WHT rate established from the reviewed source set. | Verify the current Persian provisions, recipient status and treaty before distribution. |
| Interest | No general standalone non-resident interest WHT rate established from the reviewed source set. | Analyze source, legal characterization, payer and any applicable treaty. |
| Royalties and licences | Specified non-resident receipts may fall within Article 107's deemed-income and withholding mechanism. | Confirm the contract category and implementing coefficient; do not assume a flat rate on gross receipts. |
| Technical and other services | Article 107 may apply to listed services and other covered Iranian-source receipts; deemed taxable income is generally 10–40% of receipts, varying by activity. | Confirm coefficient, tax computation, withholding responsibility and treaty treatment under the current rules. |
The absence of an identified general rate in this source review is not a conclusion that no tax can apply. Domestic law and treaty classification require transaction-specific verification.
4. Royalties, software and services
Identify whether a payment is for a licence, know-how, engineering or technical service, training, deliverables, or a bundled contract. Article 107 expressly reaches several service and licensing categories for non-residents. The nature of the work, payer, place and source of income, contract wording and applicable executive coefficients are material. Preserve agreements, work records, invoices, acceptance documents and withholding evidence.
5. Treaties and double-tax relief
Article 168 is the domestic basis for agreements with other states and Article 180 addresses foreign-tax credit. The treaty list, current status, effective date and specific limitation of source taxation must be verified for the relevant counterparty state. Retain residence certificates and evidence of foreign tax. Sanctions and payment-channel restrictions are outside the tax scope of this review and require separate advice.
6. Transfer pricing
The official consolidated Act reviewed does not contain an express, comprehensive TP regime in Articles 97 or 107. Current Article 97 concerns tax examination and assessment procedures; Article 107 concerns non-resident income and withholding by deemed taxable-income ratios. Neither is itself an arm's-length transfer-pricing code. No independently verifiable published INTA TP instruction, with confirmed title, number, date and official text, was identified in the reviewed materials.
Related-party pricing risk may still arise through ordinary deductibility, assessment and anti-avoidance administration, and administrative practice may exist beyond the available source set. Do not state that Iran has OECD-style prescribed TP methods, master/local files, CbCR thresholds or an APA program without further authoritative evidence. Maintain commercial rationale, agreements, benefit evidence and pricing support, and obtain local confirmation of current administrative practice.
7. Priority actions
- Verify the Persian law and the current Article 107 Executive Regulation for the exact transaction and deemed-income coefficient.
- Confirm whether a treaty is in force with the counterparty jurisdiction and how it applies to the income category.
- Obtain Iranian advice on any claimed INTA circular or TP procedure; require its exact Persian title, number, date and official publication.
- Keep contemporaneous related-party pricing evidence while treating the statutory TP framework as unconfirmed.
Sources reviewed
- Iran National Laws and Regulations System, Direct Taxes Act consolidated text (Persian) — official consolidated statute.
- Ministry of Economic Affairs and Finance — official ministry portal.
- Iranian National Tax Administration — official tax authority portal; specific TP instruction not verified in the reviewed materials.
- Direct Taxes Act Article 107 Executive Regulation — official tax administration link identified in the dossier; verify current page/text and coefficient in Persian.