According to Article 1 of the Iranian Tax Code, an individual is considered a tax resident of Iran if they meet any of the following criteria:
- They have a permanent residence in Iran.
- They are present in Iran for more than 183 days in a calendar year.
- They are employed by the Iranian government or a public entity in Iran.
- They are a member of the armed forces of Iran.
- They are a student enrolled in an educational institution in Iran.
For entities, tax residency is determined based on their place of incorporation or management and control. An entity is considered a tax resident of Iran if it is incorporated in Iran or if its management and control is exercised in Iran.
Impact of International Tax Treaties on Tax Residency
Iran has entered into several double taxation treaties (DTTs) with other countries. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
One of the key provisions in these treaties is the "tie-breaker" rule. This rule is used to determine the tax residency of an individual who is considered a resident of both Iran and the other treaty country under their respective domestic laws.
The tie-breaker rule typically considers factors such as the individual's permanent home, center of vital interests, and habitual abode. By establishing clear rules for determining tax residency in cases involving cross-border activities, these treaty provisions aim to prevent double taxation and facilitate tax compliance.
If you need any other informational tax guides for other countries, feel free to browse our other articles below:
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