An Analysis of Tax Revenues and Their Share of Gross Domestic Product
In every society, the government provides goods and services that the community is unable to produce on its own. Consequently, individuals allocate a portion of their income to the government in exchange for these services. This payment represents the obligation known today as taxes. Governments currently use tax revenues in legislation, regulation, public security, healthcare, basic education, and other areas. Many countries around the world have a much longer history of collecting taxes than Iran. Therefore, learning from their experiences can provide insights regarding the optimal tax-to-GDP level in Iran’s economy and the comparison between the current ratio and the desirable standard.
Definition of Tax Revenues
Taxes are compulsory, non-reciprocal payments to the government. Unlike service fees, benefits are not proportional to payments.
In Iran, tax revenues come mainly from income taxes, social contributions, goods and services taxes, and import duties.
Four main institutions collect them: The National Tax Administration, public insurance funds, municipalities, and Customs Administration.
Tax-to-GDP Ratio in Iran and OECD Countries
Iran’s tax-to-GDP ratio (2023) is 8–14%, below OECD countries (17–46%). Tax revenue in Iran is dominated by social contributions (41%), while personal income taxes are relatively low compared to OECD averages.
Legislative, Supervisory, and Policy Recommendations
Increasing the tax-to-GDP ratio in Iran requires structural and policy reforms. This includes raising government tax revenues with a focus on personal income and property taxes. Additionally, increasing the value-added tax (VAT) rate and reducing exemptions can create more sustainable revenues. Expanding social insurance coverage and streamlining corporate tax exemptions are also key measures to improve the overall tax-to-GDP ratio.
This study is conducted at Islamic Parliament Research Center Of The Islamic Republic Of IRAN by Seyed Soroush Mirhashemi, Mehdi Ghasemi Siyani, and Seyed MohammadHasasn Rasouli in 2025.
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