The VAT refund was an incentive given to compliant exporters who repatriated their overseas income as per rules of the Central Bank of Iran.
Referring to the budget bill for fiscal March 2021-22, Gholmahossein Shafe'e said the government has lifted the apparently controversial rule in the proposed budget, which "is one of the positive aspects of the budget".
"Refunding export VAT is no longer linked to exporters' repatriating their foreign earnings. This will prevent blocking exporters' funds held by the Iranian National Tax Administration,” Shafe'e was quoted as saying by IRNA.
The decision came amid mounting criticism of the CBI for imposing tough export repatriation rules, which were tightened this year.
Exporters have complained that their money, paid earlier as VAT, is blocked by INTA. As per previous regulations, exporters could demand the refund within a month after the shipment of goods. Stricter rules this year, however, allow INTA to refund the VAT after they meet their financial commitments in full, namely forex repatriation. Refunding delays mean INTA holds exporters money creating more obstacles.
The issue in recent months had become a matter of hot debate between exporters and the CBI. The former claim they are unable to fully repatriate their earnings due to the US siege that has made money transfer to and from Iran almost impossible. However, the CBI under mounting pressure to secure currency for imports appeared largely indifferent to their dilemma.
Apart from difficulties in returning export proceeds, exporters also complain that they have to go through a cumbersome bureaucracy to get their VAT.
Masoud Khansari, a senior member of ICCIMA, said earlier that exporters face added problems in VAT refunding “even after meeting their forex commitments” because the relevant administrative bodies with their cumbersome regulations are not integrated.
As per CBI rules announced in July, non-oil exporters must bring back at least 80% of their earnings in “foreign exchange hawala” and 20% in hard currency. The proceeds must be sold via the secondary forex market, known locally as Nima.
Nima is an online platform affiliated with the CBI where exporters sell their overseas currency income and companies buy it for importing goods.
The government tightened export repatriation rules after currency shortages due to the paralyzing economic and banking sanctions plus the deadly Covid-19 outbreak caused turmoil in the currency market.