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Iran: VAT exemption for hybrid and electric vehicles

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According to the law on clean air, adopted by the Iranian Parliament on July 16 2017, Mohammad Masihi, an official from the tax administration, stated that all home-grown, eco-friendly, zero-emission hybrid and electric cars and motorcycles will benefit from a tax exemption.

The old and high emission transport system is one of the main causes of pollution in metropolises and should be replaced by an eco-friendly transport system. However, this replacement requires strong infrastructure, bears high costs and involves lot of resources.

According to Article 9 of the new law, the Ministry of Interior, in cooperation with the Ministries of Industry and Mines, Commerce and Economic Affairs and Finance, is obliged to update the urban public transport system with a priority on cities with a population of more than 200,000. The five-year programme is planned to include granting loans, offering incentives and removing import duty on hybrid and electric cars and motorcycles.

Local companies will be exempt from paying VAT on such vehicles. As a reminder, the current VAT rate for the fiscal year is 9%.

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Ali Najm (ali.najm@eurofast.eu)

Eurofast Global

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