The issue of hidden subsidies allocated to upstream industries and the need to distribute the lucrative profits of these industries, which, above all, stems from widespread access to natural resources and energy subsidies, has long been seriously pursued. But another issue that should not be overlooked in these industries is their tax exemption due to […]
The issue of hidden subsidies allocated to upstream industries and the need to distribute the lucrative profits of these industries, which, above all, stems from widespread access to natural resources and energy subsidies, has long been seriously pursued. But another issue that should not be overlooked in these industries is their tax exemption due to exports.
The point is that this exemption is the result of the export of raw materials that can be turned into goods or equipment in the domestic industries of the country with high manufacturing depth and added value, and in the export markets, have more currency for the country. For this reason, the Ministry of Silence, in cooperation with the Tehran Chamber of Commerce, has taken this issue seriously and pursued the issue of abolishing tax exemptions for upstream industries in order to reduce the export of value-added raw materials, and these exemptions have been canceled by 90%.
Unfortunately, the lack of a final, transparent and logical list of raw materials is a fundamental issue that must be seriously pursued. In fact, the indecision of executive bodies to cancel or implement export tax exemptions in the absence of a specific list, can lead to serious disruptions resulting from the tastes of experts and managers of this organization.
Iran is a land rich in land and underground resources. In fact, thanks to the geographical location of our country, we have a valuable chain of mines and natural resources that, if properly implemented, could become the basis of economic and industrial development and exports of the country. But we see that the policies governing this field actually affect this value chain, especially in the field of metals and petrochemicals / a>, has become a chain of unjust resources.
While the mines face high export bans and duties, upstream industries producing metals and chemicals and petrochemicals < / a> enjoy extensive tax exemptions for the export of their products. At the same time, these industries receive tens of billions of dollars in subsidies for energy and natural resources from the pockets of the Iranian people. The profit margins of these industries accurately reflect the unequal conditions and widespread rents they enjoy.
The fact is that nowhere in the world can a producer produce a product with an average profit of 60%. Mittal currently operates as the strongest and largest steel producer in the world, with a profit margin of 2-3%. But we see that due to the wrong policies of the government, the market is practically in turmoil and in addition to creating unconventional profits for some industries, the life of the construction-oriented industries is practically endangered.
In the current situation, tax exemption for exporters of raw materials Petrochemical and metal, a double and redundant incentive And it is a costly and harmful policy for the industry and the economy of the country, and the biggest victims of this policy are domestic producers and manufacturers, who have an undeniable contribution to the production of added value and the promotion of industry and increasing the depth of construction. Tax exemption also interferes with the normal functioning of the market, as it creates unequal conditions between Iranian and foreign buyers.
This injustice manifests itself in an annoying way even in the capital market. While the average effective tax rate of listed companies is 14%, the average tax rate for upstream industries is calculated from 0.7% to 6%. The reason for this difference is the tax incentives that are defined and applied for the export of these industries and exempt a large part of the income of the upstream industries from taxes.
Given that the Ministry of Silence has many plans to develop and complete the value chain of industries, it can use the abolition of these tax exemptions as a good opportunity to support construction-oriented industries and create new financial resources equivalent to 100 to 120 thousand billion tomans. The revenue sources of this measure can be used to re-establish tax incentives for construction-oriented industries and technical and engineering services, as well as increase production diversity and complement the value chain of upstream industries, and the shortcomings in the field of many materials. Polymer and we have metal alloys, let’s compensate.
The clear result of current policies and rent support for upstream industries is a significant difference in the price of Iranian raw materials in the domestic market and the price of the same materials abroad. For example, the difference in the price of polyethylene or aluminum in Iran and Turkey is between $ 100 and $ 200. This difference, in addition to landing equipment manufacturers and exporters, is offering export markets to competing countries due to the high cost of raw materials compared to them.
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