Employer Tax Contributions

Tax Type	Rate	Base
Social Security (Employer Share)	23%	Employee's gross salary/benefits (up to ceiling)
Unemployment Insurance (Employer)	3%	Employee's gross salary/benefits (up to ceiling)
Income Tax Withholding	Progressive (0% to 35%)	Employee's taxable income

Filing & Compliance

• Monthly payroll lists and social security contributions due by the end of the month following the payroll month.
• Withheld income tax generally remitted to INTA monthly, often by the end of the month following the payroll month.
• Annual payroll tax return to INTA summarizing total salaries, taxes withheld, and social security contributions for the Iranian tax year (March 21 - March 20).

In Iran, employees' salaries are subject to income tax, deducted directly from their payroll by their employers. This tax is calculated based on a tiered system with varying rates and exemptions.

Income Tax

Iran's income tax system operates on a progressive scale. A tax-exempt threshold is determined annually. Income up to five times this exemption is taxed at 10%, and any income exceeding that amount is taxed at 20%. Both Iranian residents and foreign nationals working in Iran are subject to this tax on their Iranian-sourced income. Iranian residents are taxed on their global income.

Deductions and Exemptions

Several deductions and exemptions can reduce the taxable income:

• Social Security Contributions: Two-sevenths of the employee's social security contributions are deductible.
• Housing Loan Payments: Payments made towards housing loans can be deducted.
• Employer-Covered Medical Expenses: Medical expenses covered by the employer are exempt from taxation.
• Other Exemptions: Pensions, retirement allowances, termination payments, and service-related travel expenses and allowances are also exempt.

Social Security

Employers are generally required to make social security contributions for their employees. The coverage includes accidents, sickness, pregnancy, wage compensation, disability, retirement, and death. There are provisions for exemption, but often a compulsory accident insurance (3% of salary and benefits) is required instead.

Payroll Procedures and Deadlines

Iran uses a Pay-As-You-Earn (PAYE) system where employers deduct tax directly from employee salaries. Employers must file monthly payroll lists with the Tax Office, following the Iranian calendar months for tax payments and filings.

Other Taxes and Considerations

Besides income tax and social security contributions, there might be other taxes or considerations applicable depending on the specific situation, such as property taxes or taxes on other sources of income. Always consult with a tax advisor for personalized guidance based on the most current regulations and your individual circumstances.