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Coronavirus Crisis Will Drastically Reduce Government Tax Revenues, Iran Official Says

An Iranian man wearing a face mask walks past a closed shopping arcade in Tehran's Tajrish bazaar. April 10, 2020
An Iranian man wearing a face mask walks past a closed shopping arcade in Tehran's Tajrish bazaar. April 10, 2020

The Head of Iran's Tax Organization on Friday said the government's tax revenues will drastically shrink in the current Iranian year as a result of the coronavirus epidemic and closure of businesses.

Omid-Ali Parsa told Tasnim news agency in the best possible case only 1,400 trillion rials ($33.2 billion) of the projected 1,800 trillion rials ($42.7 billion) of tax revenues could be realized if the coronavirus crisis was over by the end of spring. "We know very little about the coronavirus, there are various possible scenarios. Same goes with the economic side of the epidemic. There are gloomy scenarios as well as optimistic ones and some in between," Parsa added.

Parsa also said that the Tax Organization has taken some measures to help businesses and producers affected by the pandemic which include granting a period of grace for taxes and writing off fines but stressed that full tax exemptions due to coronavirus have yet not been considered.

The Iranian government has relaxed its social distancing regulations and allowed some businesses considered low-risk to reopen. Shopping arcades and malls have also been allowed to open but for reduced hours.

The Iranian economy has been hit hard by U.S. sanctions. Iranian oil exports have dropped from 2.5 million barrels per day before the sanctions to about 140, 000 barrels and to make matters worse, the current drop in oil prices is also likely to affect projected government revenues in the current Iranian fiscal year. President Hassan Rouhani, however, on Wednesday claimed that Iran's losses would be "much less" than other producers.

Together with reduction in tax collection, Iran's already trimmed budget will face a serious shortfall that can only be compensated by huge withdrawals from its foreign currency reserves, estimated to be around $75 billion.

According to the latest official statement by the Health Ministry on Thursday, since February 19 nearly 5,500 have died of COVID-19 and more than 87,000 have tested positive for coronavirus. Iran's Health Ministry bases its numbers for COVID-19 deaths and infections solely on positive test results so the real numbers may be much higher.