Customs Duty, Commercial Profit Tax and VAT: The Statutory Cost Structure of Iranian Imports

1. Key takeaways

The statutory cost of importing medical devices into Iran consists of three parts: customs duty, commercial profit tax and value-added tax (VAT). GRZAN’s judgment is that the most common quotation error is counting only the customs duty and omitting the VAT, or carrying over the tax rates of the previous fiscal year. The statutory standard VAT rate in the VAT Law is 9%, but it can be adjusted upward year by year through the annual budget law, and the rate actually applied in each fiscal year (which begins on 21 March) must be re-verified every year. Two further rules drive the arithmetic. First, VAT on imports is levied by customs at release on a base of customs value plus customs duty — not on the goods value alone — so omitting this base rule materially understates the tax burden. Second, commercial profit tax applies to imports by category, and the commonly cited figure for most categories is a practical estimate rather than a published statutory rate, so the current customs tariff governs. Because each of the three components has its own legal source, its own base and its own update cycle, GRZAN’s recommendation is to build the import cost model in three explicit parts and to schedule a rate verification at the start of every fiscal year rather than treating the tax table as a fixed input.

• Import cost consists of customs duty, commercial profit tax and VAT; all three must appear in the cost model.
• The statutory standard VAT rate is 9% under the VAT Law, adjustable upward each year through the annual budget law.
• The rate actually applied in each fiscal year, which begins on 21 March, must be re-verified annually.
• Import VAT is levied by customs at release on customs value plus customs duty, not on the goods value alone.
• Commercial profit tax applies by category; the commonly cited rate for most categories is a practical estimate, subject to the current customs tariff.

2. Legal basis

The three cost components rest on two statutes — the VAT Law and the Direct Taxes Law — and on the customs tariff practice for commercial profit tax. The items below state each basis and its verification status.

1. VAT Law: approved on 23 May 2021 and effective on 3 January 2022; standard rate 9% (in composition, 6% VAT plus 3% municipal consumption tax); exports are zero-rated; imported goods are levied by customs at release on customs value plus customs duty.
2. Direct Taxes Law: 1987, Article 105, taxable income of legal entities at a 25% rate.
3. Commercial profit tax: Iran levies commercial profit tax on imported goods by category, and the practical estimate for most categories is 4% — this percentage is not found in a uniformly published official text and is a practical estimate, subject to the current customs tariff.

3. Expert insights

Insight 1: the VAT base includes the customs duty. VAT at the import stage is levied on customs value plus customs duty, not on the goods value alone. Companies that miss this base rule in their cost models understate the real tax burden by 1–2 percentage points. The error is systematic rather than random — it repeats on every shipment and compounds across a product line — and it is invisible in quotations built from memorised rates rather than from the statutory base. The fix is to encode the base rule directly into the costing template, so that no analyst ever has to remember it under time pressure.

Insight 2: the statutory rate and the applied rate can differ. The statutory standard rate in the VAT Law is 9%, but Iran adjusts the applied rate through the annual budget law, and public industry sources indicate that in recent years the rate has been running at around 10%. The applied rate must be re-verified for every fiscal year — this is the variable most easily overlooked on a quotation sheet. A costing process that automatically refreshes the rate after each 21 March removes the risk that a quotation is built on the previous year’s figure.

Insight 3: medicines and certain medical supplies carry exemption or zero-rating arrangements. Iran grants VAT exemptions to essential medicines, unprocessed agricultural products, books and similar items. Whether a specific medical device falls within the exemption scope must be verified item by item against the tariff code; it cannot be handled on the assumption that medical supplies are uniformly tax-free. Treating the exemption question as an HS-code-level check, rather than a category-level assumption, is what keeps the landed-cost model defensible. It also gives the company a documented answer to give customs and to its own finance team, instead of a verbal judgment that cannot be reproduced when the shipment is questioned.

4. Practical recommendations

• Model import cost in three parts: customs duty plus commercial profit tax plus VAT, with the VAT base including the customs duty.
• Verify the applied rate every fiscal year: after the new fiscal year starts on 21 March, re-verify the rate determined for that year by the budget law.
• Verify tariff codes item by item: confirm the HS code and the corresponding customs duty and commercial profit tax rates, without estimating by broad category.
• Include a tax-change clause in contracts: agree a price adjustment mechanism for when the tax burden changes beyond an agreed margin.

5. Verification checklist

• □ Import cost has been modelled in three parts: customs duty, commercial profit tax and VAT
• □ The VAT base includes the customs duty and nothing has been omitted
• □ The VAT rate applied in the current fiscal year (from 21 March) has been verified
• □ The HS codes and corresponding rates have been verified item by item
• □ The contract contains a price adjustment mechanism for tax burden changes

Regulatory information verified as of 29 October 2026.

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support for the Iranian market. Our team coordinates local import arrangements, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com