The Article 100 Note: Simplified Tax Assessment for Iranian Small Businesses

Every Khordad I get the same question from business owners: complete the Article 100 Note form, or file a normal return? There is no short answer, because it depends on turnover, real margin and where the business is heading over the next few years. This note sets out the decision framework.

What the Article 100 Note simplifies

Article 100 of the Direct Taxes Act requires business owners to file an annual return. The Note to that article allows the tax administration to set tax on a lump-sum basis for taxpayers whose annual turnover falls below a defined ceiling.

In practice, instead of filing a return, maintaining books and going through an assessment process, you confirm a form and pay a set amount. The file for that year normally closes without an audit and without an assessment notice.

Eligibility conditions

• You are an individual business owner. Legal entities are excluded and must file the corporate income tax return.
• Prior-year combined sales of goods and services do not exceed the announced ceiling.
• The form is completed and confirmed in the system by 31 Khordad.
• The assessed tax is paid on schedule, in full or in the instalments offered.

The turnover ceiling is updated annually. Quoting last year's figure is a common and avoidable error — check the latest circular.

The two routes compared

Who tends to benefit

1. Retail shops with sector-typical margins and incomplete purchase documentation.
2. Small service businesses whose costs are mostly cash and unreceipted.
3. Businesses where maintaining a full accounting system costs more than the tax it would save.
4. Taxpayers with a history of disputes, for whom certainty carries real value.

The common thread is that actual profit is not below the basis the administration proposes. When that holds, the lump-sum route is both cheaper and calmer.

Who should not take it

• Businesses that made a loss. Nothing is declared, so the right to carry that loss forward disappears.
• Thin-margin activity such as wholesale distribution, where the lump-sum basis usually exceeds real profit.
• Businesses with a specific exemption or zero-rate entitlement that would pay less on a normal return.
• Fast-growing businesses that will cross the ceiling next year; postponing the accounting system by a year rarely pays.
• Taxpayers whose bank turnover is large relative to declared sales, where the bank transaction review route stays open regardless.

Working through the decision

1. Compute prior-year turnover from the books, taxpayer system invoices and card-reader activity.
2. Compare it with the announced ceiling for that year.
3. Estimate the year's real profit so you have a basis for comparison.
4. Calculate the tax under both scenarios and quantify the gap.
5. If the Note is favourable, complete and confirm the form in the system.
6. Put the payment or instalment dates into your cash calendar.
7. Archive the year's documents even though you are not required to present them.

Step seven matters more than people expect. Immunity from an income assessment is not immunity from later enquiries.

Obligations that remain

Choosing the Note only removes the filing and bookkeeping obligation for that year. Registration and invoicing in the taxpayer system continue if you have been called up, as do VAT filing and payment where you are in scope, quarterly transaction reports for the relevant business groups, payroll tax withholding and social security lists, and retention of purchase and sales documents.

Neglecting these erases the savings from the lump-sum route within a couple of quarters.

Making the final call

My rule of thumb: compare the proposed lump-sum figure against the tax you would pay on an ordinary return with the documentation you actually have, then weigh the gap against the value of your time and the risk of an audit. Where the gap is small, simplicity and certainty usually win. Where it is significant, investing in documentation and a normal return pays for itself and builds the infrastructure you will need in later years anyway.

Key takeaways

• The Article 100 Note is a simplified, final assessment method — not an exemption.
• The turnover ceiling changes annually; always verify the current figure.
• The deadline is 31 Khordad; missing it restores the ordinary filing obligation and its penalty.
• Loss-making and thin-margin businesses usually pay more under the lump-sum route.
• VAT, taxpayer system and payroll obligations survive the choice entirely.