Long-term transformation of fiscal instruments under sanctions pressure: Iran's experience and its relevance to Russia

The subject of this study is the Iranian tax system and its changes in the context of international sanctions that have been in effect against the country for several decades. Given that Iran's fiscal system has undergone a number of significant changes during the period of sanctions pressure, the experience of this country is relevant for Russia both in terms of possible tools aimed at stabilizing the economy and in terms of forecasting trends in the transformation of the tax system. The analysis and characteristics of Iranian tax system is carried out through the prism of its adjustment and changes necessary to ensure the country's fiscal stability in the face of sanctions pressure. Data published by the World Bank and the Central Bank of Iran are used as sources. The purpose of the study is to characterize and identify Iranian positive experience in changing the tax system under the conditions of sanctions pressure and to develop recommendations for its application in Russia. The research methods used are analysis, synthesis, induction, and classification. The following indicators are used: the tax burden, the share of taxes in the total amount of state budget revenues, the share of individual tax payments in the total amount of tax payments. The data are analyzed in dynamics for the period 1972 – 2020. A graphical way of presenting data is used to visualize the results of the analysis. As a result of the analysis, it is concluded that taxes under the conditions of sanctions become an alternative source of income for the state budget of Iran. Meanwhile the structure of the country tax payments has undergone significant changes, as a result of which the role of insurance premiums and indirect taxes (primarily VAT) has significantly increased. Iranian experience is relevant for Russia. Thus, the result of the analysis demonstrates that due to the fact that sanctions are a significant barrier to foreign trade, taxation becomes, in fact, the only source of government revenue, and the fiscal function of taxes becomes dominant. In this regard, an increase in the nominal corporate profits tax rate by 5 percentage points while maintaining the existing preferential mechanisms, as well as progressive five-stage taxation of personal income, becomes a logical and justified tool for replenishing the state budget, which allows achieving the task.

Iran, sanctions, taxation, tax burden, state revenue, tax payments, structure of tax revenues, state budget, indirect taxes, transformation