Coverage
The ACT covers all transactions including sale of all goods and services (except for the exempted transactions) as well as their exports and imports.

Exempted Transactions
The following items are exempted from VAT:

- Consumer goods included in families consumption basket e.g., bread, sugar, ... etc.- Agricultural products (un-processed) and inputs.
- Live stock and poultry
- Medication and medical services
- Research and training services
- Banking services
- Passenger transportation services
- Rental and sale of property.
- Tax-payers with annual sales below bln Rls.3
- Export of goods and services are subject to zero tax rate; any paid VAT shall be reimbursed to the tax-payer.

Bases, Rates and Calculation of VAT
The basis for calculation of VAT will be the cost price of goods and services reflected in the invoice. The VAT rate is 1.5 percent except for certain specific goods, namely, cigarettes (12%) and fuel (20%). This will be in addition to the 1.5 percent charged for municipality duties (for cigarette 3% and fuel 5% to 10%)

Taxpayers Obligation
Suppliers of goods and services must register themselves with the State Taxation Organization; the first groups are:

A- All Importers
B- All Exporters
C- Economic entities with turn-over of bln Rls.3 or more.

Taxpayers are required to submit every three months a VAT return, in accordance with the procedures prescribed by the State Taxation Organization.
Certain penalties are foreseen in the law for the taxpayers failing to comply with these regulations.
Tax payers are required to calculate the tax stipulated in the Act and collect it from the other party to the transaction (recipient of goods and services).

Other Regulations
Tax payers subject to these regulations are required to use books, forms, systems, etc, prescribed by the State Taxation Organization.
Recognition and collection of the tax referred to above is vested upon State Taxation Organization. Taxpayers are required to put their books and documents at the disposal of the relevant inspectors. Non-presentation of the relevant documents will result in deemed assessment of the tax as well as penalty charges. Taxpayers can utilize services of the CPA's for the audit of the Value Added Tax returns.

For further information and registration, please visit www.VAT.ir