1- Assistant Professor of Agricultural and Food Policy Research Group, Research Institute for Planning, Agricultural Economics and Rural Development, Tehran, Iran
Abstract: (51 Views)
Extended Abstract:
Granting exemptions, deductions, and acceptable tax expenses is one of the most important and integral components of any type of tax system, and numerous theoretical and experimental discussions have been held in agreement and opposition to their existential philosophy. Proponents of granting exemptions, deductions and acceptable expenses believe that collecting taxes from the lowest-income sections of society and removing acceptable personal expenses in areas such as agriculture and food directly affect the quality of life of the low-income family. On the other hand, guaranteeing the minimum subsistence level for the low-income sections of the society is one of the most important duties of any government.
The current study seeks to present the experience of Organization for Economic Cooperation and Development in the field of agricultural exemptions and incentives while examining the status of tax exemptions and incentives in the Islamic Republic of Iran for the agricultural sector. Using the experiences of economically successful countries to speed up and reduce the probability of failure of agricultural tax exemptions is of particular importance.
Introduction and Objectives
Since there have been extensive researches in the field of tax exemptions and incentives in the agricultural sector in selected countries, this research is considered a descriptive and documentary experimental study. Based on the questionnaire that the Organization for Economic Cooperation and Development (OECD) has designed about taxes in agriculture and reported its results in 2020, different types of tax behaviors in the agricultural sector have been investigated.
Materials and Methods
The current paper is comparative-analytical research. Since there have been extensive researches in the field of tax exemptions and incentives in the agricultural sector in selected countries, this research is considered a descriptive and documentary experimental study. Domestic regulations are collected from the Tax Affairs Organization of I.R. of Iran and the required documents and resources related to the experiences of 34 countries of the world from Latin America, South America, Europe and Oceania, was available in OECD web page on 2020.
Results
The results show that the tax exemptions of the agricultural sector in 2022 accounted for only 3.5% of direct taxes and 2.2% of total tax revenues. The allocation of exemptions is for the benefit of other sectors and the agricultural sector has little benefit in the optimal allocation of tax exemptions, considering its share of 10.4% of the GDP and 15% of the country's employment.
Agricultural tax policies of the 35 member countries of the Organization for Economic Cooperation and Development, depending on the country, can include taxes on income, profit and capital gains in different ways. It is classified into social security premiums, payroll and labor taxes, property taxes (including property transfer taxes), and goods and services taxes (including sales taxes and value added taxes). Tax exemptions for small or low-income farmers, tax exemptions for income from certain products, tax exemptions for income from certain areas, tax exemptions for income from young farmers, capital gains exemptions, cash accounting, tax rebates on property tax, gift or inheritance, exemption from paying local or regional business tax are widely used in the agricultural sector. In addition to these privileges and tax incentives that were created last year for the agricultural sector, they have not been reviewed, modified and changed.
Most countries (such as the United States and Austria) allow farmers to use cash accounting (or not require them to keep accounts), compared to other businesses that are generally required to use the accrual accounting method for tax reporting and accounting. In the cash accounting method, incomes and expenses are recognized at the time of receipt or payment of physical cash. This gives farmers considerable flexibility about when to report income and expenses for tax purposes
Conclusion:
Tax concessions in personal income tax regimes are higher than in corporate income tax regimes (18 out of 35 countries report no preferential treatment). While these concessions generally reduce the tax base and thus the payment of farm households, they are aimed at reducing the effects of specific issues such as reduced income diversity, compensating for higher production costs in certain areas or for young farmers, reducing costs. Administrative services for small farms are provided with the possibility of using the cash accounting method and exempting (part of) capital gains to facilitate farm transfers.
When farmers use the method of valuation or estimation of other similar activities to calculate the taxable income from agricultural activities instead of determining the actual income, the accounting of the agricultural unit is not necessary for them. This particular approach to calculating taxable farm income dates back to a time when accounting was rare in agriculture. Although in many countries, the provincial tax system treats farm income and other self-employment taxes similarly, it is still A significant number of farmers in the OECD region benefit from simplified accounting methods.
Many countries provide tax support for capital gains generated in the agricultural sector. In order to encourage succession and reconstruction of farms and ultimately the productivity of this sector, capital gains are either exempted from income tax in some countries, or only a portion of it is taxed. Farms are sometimes valued in such a way that the profit becomes zero.
Granting exemptions, deductions, and acceptable tax expenses is one of the most important and integral components of any type of tax system, and numerous theoretical and experimental discussions have been held in agreement and opposition to their existential philosophy. Proponents of granting exemptions, deductions and acceptable expenses believe that collecting taxes from the lowest-income sections of society and removing acceptable personal expenses in areas such as agriculture and food directly affect the quality of life of the low-income family. On the other hand, guaranteeing the minimum subsistence level for the low-income sections of the society is one of the most important duties of any government.
The current study seeks to present the experience of Organization for Economic Cooperation and Development in the field of agricultural exemptions and incentives while examining the status of tax exemptions and incentives in the Islamic Republic of Iran for the agricultural sector. Using the experiences of economically successful countries to speed up and reduce the probability of failure of agricultural tax exemptions is of particular importance.
Introduction and Objectives
Since there have been extensive researches in the field of tax exemptions and incentives in the agricultural sector in selected countries, this research is considered a descriptive and documentary experimental study. Based on the questionnaire that the Organization for Economic Cooperation and Development (OECD) has designed about taxes in agriculture and reported its results in 2020, different types of tax behaviors in the agricultural sector have been investigated.
Materials and Methods
The current paper is comparative-analytical research. Since there have been extensive researches in the field of tax exemptions and incentives in the agricultural sector in selected countries, this research is considered a descriptive and documentary experimental study. Domestic regulations are collected from the Tax Affairs Organization of I.R. of Iran and the required documents and resources related to the experiences of 34 countries of the world from Latin America, South America, Europe and Oceania, was available in OECD web page on 2020.
Results
The results show that the tax exemptions of the agricultural sector in 2022 accounted for only 3.5% of direct taxes and 2.2% of total tax revenues. The allocation of exemptions is for the benefit of other sectors and the agricultural sector has little benefit in the optimal allocation of tax exemptions, considering its share of 10.4% of the GDP and 15% of the country's employment.
Agricultural tax policies of the 35 member countries of the Organization for Economic Cooperation and Development, depending on the country, can include taxes on income, profit and capital gains in different ways. It is classified into social security premiums, payroll and labor taxes, property taxes (including property transfer taxes), and goods and services taxes (including sales taxes and value added taxes). Tax exemptions for small or low-income farmers, tax exemptions for income from certain products, tax exemptions for income from certain areas, tax exemptions for income from young farmers, capital gains exemptions, cash accounting, tax rebates on property tax, gift or inheritance, exemption from paying local or regional business tax are widely used in the agricultural sector. In addition to these privileges and tax incentives that were created last year for the agricultural sector, they have not been reviewed, modified and changed.
Most countries (such as the United States and Austria) allow farmers to use cash accounting (or not require them to keep accounts), compared to other businesses that are generally required to use the accrual accounting method for tax reporting and accounting. In the cash accounting method, incomes and expenses are recognized at the time of receipt or payment of physical cash. This gives farmers considerable flexibility about when to report income and expenses for tax purposes
Conclusion:
Tax concessions in personal income tax regimes are higher than in corporate income tax regimes (18 out of 35 countries report no preferential treatment). While these concessions generally reduce the tax base and thus the payment of farm households, they are aimed at reducing the effects of specific issues such as reduced income diversity, compensating for higher production costs in certain areas or for young farmers, reducing costs. Administrative services for small farms are provided with the possibility of using the cash accounting method and exempting (part of) capital gains to facilitate farm transfers.
When farmers use the method of valuation or estimation of other similar activities to calculate the taxable income from agricultural activities instead of determining the actual income, the accounting of the agricultural unit is not necessary for them. This particular approach to calculating taxable farm income dates back to a time when accounting was rare in agriculture. Although in many countries, the provincial tax system treats farm income and other self-employment taxes similarly, it is still A significant number of farmers in the OECD region benefit from simplified accounting methods.
Many countries provide tax support for capital gains generated in the agricultural sector. In order to encourage succession and reconstruction of farms and ultimately the productivity of this sector, capital gains are either exempted from income tax in some countries, or only a portion of it is taxed. Farms are sometimes valued in such a way that the profit becomes zero.
Keywords: Tax incentives, Tax exemptions, economic cooperation and development organization (OECD), agriculture.
Type of Study: Applicable |
Received: 2024/01/2 | Accepted: 2024/07/22
Received: 2024/01/2 | Accepted: 2024/07/22
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