Negotiations with Turkey on Reopening Trade Borders

In a video conference head of Iran’s Trade and Promotion organization with the deputy minister of commerce of Turkey, discuss trade developments, removal of the restrictions during the current situation of Coronavirus.

As the Iranian government is making all its effort to ensure the health and safety of commercial cargoes and the establishment of disinfection facilities and observation of personal hygiene on exporting goods, with complying health protocols, Iran and Turkey are willing to reopen the borders.

The trade borders between Iran and Turkey will reopen as soon as possible, and this critical issue will happen in the near future.

They also emphasized the need for broadening friendly ties and the significance of bilateral trade and economic relations.

The issuance and transfer of checks to the bearer will be prohibited from 11 December this year under the new Cheque Act.

According to the amendment to the cheque Act, the issuance and drawing a cheque to the bearer, drawing and transfer a cheque in just physical form, issuance checkbooks for the persons with bounced cheques, bankrupts and persons in failing circumstances and not able to pay the amounts of cheques is prohibited.

The central bank in the present year must provide the necessary infrastructure for the recipient of the cheque to make it possible to inquire about the latest status of the check drawer. Also, information such as the validity limit of the drawer, the history of the bounced checks in the last three years, and the number of unsettled obligations should be provided.

Good News for Manufacturing Units

One of the vice presidents in the Ministry of Industry, Mine and Trade, referring to the recently approved regulation of the Monetary and Credit Council on the determination of the bank debt of the production units.

This approval shows, all production units licensed by the Ministry of Agriculture and the Ministry of Mine and Trade, by the end of September, may Settle on 7.5% of their debt to the banking system. With a 4-month braking period and within five years of installment of debts, they are permitted to settle their debt and benefit from banking services and facilities.

Permission for Importing Vehicles

Following the additional clause 7 of the bill of the general budget of Iran for 1399, imports of light and heavy vehicles (with the priority of hybrid cars), mining and road construction machinery with foreign currency are permitted under the laws and regulations.

Reviews from the last two years show that 680 import companies were operating, which with the import ban of cars now remaining nine-car importers, are working, which operate at their minimum capacity.

Revaluation of assets in Iranian companies

According to article 141 of the Iranian commercial code (1968) ” In the case of the loss of a minimum of half the company’s capital, the board of directors is bound to call an extraordinary general meeting immediately, to decide whether the company shall be wound up or shall continue its operations”. On this basis, lots of giant companies, as their financial statements show, are bankrupt. Since their cumulative losses have risen by more than half of their registered capital, Accordingly, Iran khodro and Saipa -two of the major automaker’s company in Iran- are legally considered bankrupt. However, new facilities are being offered to these companies and accordingly they may be withdrawn from article 141. According to the new bylaw recently approved by the government, automakers can update the value of their assets and thus increase their fixed capital. As capital increase through revaluation, the ratio of accumulated losses to fixed capital changes and automakers are therefore excluded from Art.141.

Iran Khodro and Saipa have already made some preparatory steps to get out of bankruptcy. In parallel, in the process of re-evaluating the assets, automakers can take advantage of their various assets, including real estate, machinery, and even long- term fixed investment. Authorized audits shall do a reevaluation of such assets. This process shall be done by a formal petition of each company to the Association of Judicial Experts and therefore, the companies do not interfere with the selection of financial experts.

In addition to the above mentioned, terms of executive bylaw approved by the government are as follow:

Pursuant to note 1 of Article 149 of the Direct Tax Act, the increase in the cost arising from the revaluation of the assets of legal entities shall not be subject to income tax due to accounting standards, and the depreciation expense resulting from the revaluation increase. Expenses are not considered taxable and are measured at the time of sale or exchange of revalued assets with the differences between the sale price and the book value without applying revaluation in calculating taxable income.

Article 10 of executive bylaw of Note 1 of Article 149 of Direct Tax Law:

Article 10: “Covering losses from the assets revaluation surplus and transferring the surplus to the profit or loss account, or distributing it in any form between the owner of the assets constitute compliance with accounting standards and is subject to income tax.

Note 1: legal entities subject to note 1 of article 149 of Direct Tax Act, within one year of asset’s revaluation shall begin legal procedure for transferring the revaluation of surplus to the capital account and record increase capital in Iran’s registration office. This surplus transferred amount shall not be subject to income tax.

It should be noted that the increase in capital from this location is only acceptable if this amount is added within one year of the revaluation and this is only possible once every five years. This limitation set force in this bylaw shall apply only to the revaluation of each category of assets separately from other categories. Therefore revaluation of different asset categories other than the aforementioned is allowed during those five years.

tax from unoccupied houses and apartments

According to the current tax regulation by the government of Iran (Direct Tax Act) Residential units located in cities -which are identified as “Unoccupied” based on the information derived from the National Database of Real Estates and Housing of the Direct Act- shall be subject to the rental income tax.

Recently the government has taken steps for the activation of the National Database and this move shows that the government is eager to receive this kind of tax from unoccupied houses and apartments.Calculation of such tax is based on following formula:

– For the second year: an amount equivalent to one-half of the due tax of the Properties Schedule;

– For the third year: an amount equal to the due tax of the Properties Schedule; and

– For the fourth year onward: an amount equivalent to 1.5 times the due tax of the Properties Schedule.

The Iranian government is planning on launching this National Database by the end of the current Iranian calendar year (March 19, 2020). It is estimated that there are more than 2.6 million empty homes, a figure which is three times more than the global average.