{"id":24606,"date":"2018-04-12T12:23:45","date_gmt":"2018-04-12T11:23:45","guid":{"rendered":"https:\/\/www.ncr-iran.org\/en\/blog\/24606-iran-s-free-economic-zones-or-the-seven-headed-corruption-monster"},"modified":"2023-01-18T14:25:57","modified_gmt":"2023-01-18T13:25:57","slug":"iran-s-free-economic-zones-or-the-seven-headed-corruption-monster","status":"publish","type":"post","link":"https:\/\/www.ncr-iran.org\/en\/blog\/iran-s-free-economic-zones-or-the-seven-headed-corruption-monster\/","title":{"rendered":"Iran’s Free Economic Zones, or the Seven-Headed Corruption Monster"},"content":{"rendered":"

by\u00a0Mahmoud Hakamian<\/strong><\/p>\n

There are currently 3000 shell companies that have registered their headquarters in the country\u2019s free economic zones for tax evasion purposes, says Kamel Taghavinejad, head of regime\u2019s Tax Admission Organization.<\/p>\n

In an earlier article titled \u201cDana\u2019s special report on strange events in the country\u2019s free economic zones\u201d, state-run Rah-e-Dana website reports on \u201cshell companies\u2019 dominance in unmonitored areas\u201d and \u201cimport of more than $2 billion worth of goods in one year through free zones without paying customs duties.\u201d (State-run Rah-e-Dana website, July 21, 2016)<\/p>\n

Also In an article titled \u201cgovernment\u2019s insistence on expanding free economic zones despite tax violations\u201d, Khamenei-linked Kayhan newspaper on February 6, 2017, writes \u201caccording to law, natural and legal persons involved in business activities in free economic zones are exempt from paying income and asset taxes for 20 years. This, in addition to exemption from value added tax, has raised problems in the country\u2019s free trade zones.\u201d<\/p>\n

\u201cSuch tax exemptions in free zones have actually made many mouths water, encouraging companies to establish their headquarters in such areas regardless of whether or not they\u2019re operating there. In other words, although such companies are registered in free economic zones and enjoy their tax exemptions, but they \u2018re actually operating elsewhere\u201d, the newspaper says.<\/p>\n

Nonetheless, Rouhani\u2019s adviser and Secretary of Supreme Council of Free Zones \u2018Morteza Bank\u2019 has rejected the reports as untrue, saying \u201cthere\u2019s no such thing as tax evasions and operation of shell companies in the country\u2019s free zones.\u201d (State-run Fars news agency, December 31, 2017)<\/p>\n

\"free-economic-zones-Iran\"<\/p>\n

The fact, however, is that by having registered headquarters in free zones while operating elsewhere, the companies are not only exempt from filing their tax returns, but they even falsely claim that they\u2019ve made losses. Moreover, regime\u2019s government and parliament have officially acknowledged shell companies\u2019 operation and tax violations in the country\u2019s free zones, despite Rouhani\u2019s adviser rejecting the case.<\/p>\n

\u201cParliament\u2019s Economic Committee has reached an agreement with the government to improve the law on how to run free trade and industrial zones so as to prevent smuggling goods, tax evasion, and operation of shell companies in these areas\u201d, says had of regime Parliament\u2019s Economic Committee. (regime\u2019s Parliament news agency, January 15, 2018)<\/p>\n

So, the question is, if the operation and tax violations of shell companies in the country\u2019s free zones were out of the question, then what was the need for such laws to prevent tax evasion or operation of shell companies?<\/p>\n

The corruption<\/a> and violations in free zones is however not limited to operation of shell companies and their tax evasion, as the free zones are now among the country\u2019s main centers of economic corruption and major hubs for smuggling goods.<\/p>\n

Rahim Zarei, regime MP, points out that the value of smuggling activities in the country\u2019s free zones is 150 times higher than the investment made in such areas, while Ahmad Mohammadi-Anaraki, also a regime MP, says that \u201cunfortunately, the country\u2019s free trade zones have turned into a hub for smuggling goods, despite their intended functioning.\u201d (State-run Fars news agency, October 22, 2017)<\/p>\n

In an interview with the Revolutionary Guards\u2019 Fars news agency, secretary of regime parliament\u2019s Economic Committee \u2018Hossein Shahroudi\u2019 points to the main reason for setting up free economic zones, saying \u201crather than being exporting hubs, the country\u2019s free trade zones have now turned into major points for importing luxury and unnecessary products that not only fail to create jobs, but deliver a major blow to the country\u2019s economy and production as well.<\/p>\n

\u201cThe performance of our free zones over the past couple of years shows that such zones have not only failed to promote productive employment and boost exports, but they\u2019ve also turned into a gateway for unmonitored imports of goods.\u201d (State-run Fars news agency, September 27, 2017)<\/p>\n

The free trade areas are also places for corruption and rentiering, in such a way that rentiers are now dominating these areas.<\/p>\n

Commenting on rentiering activities, especially the ones carried out in free zones, Rouhani\u2019s adviser Akbar Torkan says \u201cas an instance, when the price of land in Kish Island was 30 million rials per square meter, government-owned lots were assigned at only four million rials per square meter, so that anyone lucky enough to acquire one had actually a winning ticket in hand. The profit one could make by buying the lot at four million per square meter and selling it at its much higher real price equaled 30 years of the salary you as a journalist receive, providing that you save all you receive. So, the person who was assigned the lot could make such a profit in the blink of an eye.\u201d (State-run IRNA news agency, April 9, 2017)<\/p>\n

These are just instances of the economic corruption underway in Iran\u2019s free trade areas. Besides, that\u2019s just a small part of an institutional corruption within the mullahs\u2019 regime and its economic structure, a corruption that regime leader Ali Khameni refers to as a \u2018seven-headed dragon\u2019.<\/p>\n

By setting up such free trade areas, the regime has actually provided its associates with jobs that enables them to move forward with their predatory activities, as excessive imports, smuggling and rentiering activities in such areas has cost the country a large part of its domestic production and millions of jobs.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Mahmoud Hakamian There are currently 3000 shell companies that have registered their headquarters in the country’s free economic zones for tax evasion purposes, says Kamel Taghavinejad, head of regime’s Tax […]<\/p>\n","protected":false},"author":8,"featured_media":42731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[71],"tags":[178],"class_list":{"0":"post-24606","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-blog","8":"tag-save"},"yoast_head":"\nIran's Free Economic Zones, or the Seven-Headed Corruption Monster - NCRI<\/title>\n<meta name=\"description\" content=\"by\u00a0Mahmoud Hakamian There are currently 3000 shell companies that have registered their headquarters in the country\u2019s free economic zones for tax evasion\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ncr-iran.org\/en\/blog\/iran-s-free-economic-zones-or-the-seven-headed-corruption-monster\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Iran's Free Economic Zones, or the Seven-Headed Corruption Monster - 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