Iran Puts VAT Law into Effect

TEHRAN (FNA)- The director of the Iranian National Tax Administration here on Tuesday announced that the value added tax (VAT) law has been enforced as of September 22.

Ali Akbar Arab Mazar said that the imposition of VAT is an efficient way to fight against money laundering, adding that the World Trade Organization (WTO) has stipulated that the VAT enforcement is a prerequisite for the WTO membership, Tehran Times said citing a report by the state-run tv.

Value added tax (VAT), or goods and services tax (GST), is a consumption tax levied on value added. In contrast to sales tax, VAT is neutral with respect to the number of passages existing between the producer and the final consumer; where sales tax is levied on total value at each stage, the result is a cascade (downstream taxes levied on upstream taxes).

A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire fee of the tax.