Volume 1, Issue 1 (1-2026)
Economy and Food Security 2026, 1(1): 101-117 |
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Rajabi E, Baghestany A A, Toosi M. (2026). Agricultural Tax Exemptions and Incentives in Selected Countries: Issues and Policy. Economy and Food Security. 1(1), 101-117. doi:10.61882/efs.2025.62
URL: http://efs.sanru.ac.ir/article-1-62-en.html
URL: http://efs.sanru.ac.ir/article-1-62-en.html
1- Agricultural Planning, Economic and Rural Development Research Institute (APERDRI), Tehran, Iran
Abstract: (1257 Views)
Extended Abstract
Background: Granting exemptions, deductions, and acceptable tax expenses is one of the most important and integral components of any type of a tax system, and numerous theoretical and experimental discussions have been made 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 low-income families. On the other hand, guaranteeing a minimum subsistence level for the low-income sections of society is one of the most important duties of any government.
The current study seeks to present the experience of the Organization for Economic Cooperation and Development (OECD) 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. It is of particular importance to use the experiences of economically successful countries to speed up and reduce the probability of failure of agricultural tax exemptions.
Based on the questionnaire designed by the OECD about taxes in agriculture and its results reported in 2020, different types of tax behaviors were investigated in the agricultural sector.
Methods: The current paper is comparative-analytical research. Since there have been extensive studies 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 were collected from the Tax Affairs Organization of the 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 were available on the OECD website in 2020.
Results: 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 exemptions are allocated 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 OECD, 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, and 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, or 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.
Background: Granting exemptions, deductions, and acceptable tax expenses is one of the most important and integral components of any type of a tax system, and numerous theoretical and experimental discussions have been made 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 low-income families. On the other hand, guaranteeing a minimum subsistence level for the low-income sections of society is one of the most important duties of any government.
The current study seeks to present the experience of the Organization for Economic Cooperation and Development (OECD) 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. It is of particular importance to use the experiences of economically successful countries to speed up and reduce the probability of failure of agricultural tax exemptions.
Based on the questionnaire designed by the OECD about taxes in agriculture and its results reported in 2020, different types of tax behaviors were investigated in the agricultural sector.
Methods: The current paper is comparative-analytical research. Since there have been extensive studies 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 were collected from the Tax Affairs Organization of the 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 were available on the OECD website in 2020.
Results: 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 exemptions are allocated 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 OECD, 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, and 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, or 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.
Keywords: Agriculture, Organization for Economic Cooperation and Development (OECD), Tax incentives, Tax exemptions
Type of Study: Applicable |
Received: 2025/07/25 | Accepted: 2025/11/23
Received: 2025/07/25 | Accepted: 2025/11/23
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