Iranian VAT at 10%

What this works out

Iranian VAT, in both directions. Type a net amount and it adds the tax; type a gross amount and it works the tax back out, which is a division rather than a subtraction.

The table underneath shows the standard rate alongside whatever you type into the free rate field, with the VAT fraction for each — which on this tool is usually a comparison between the current 10% and the 9% that preceded it.

One rate, raised in 1403

Standard, 10%. In force since the start of the Iranian year 1403, on 20 March 2024. Before that it was 9%, for long enough that a great many invoices still in circulation carry the older figure.

A later budget bill proposed raising it again to 12%, with the extra revenue returned to households through electronic food vouchers; parliament revised it back to 10% before approving the budget. So 10% is the rate, and 12% is a proposal worth knowing about rather than planning around.

Exemptions rather than reduced rates do the redistributive work: unprocessed agricultural produce, staple foods, medicines and medical services, education, publishing and certain financial services are outside the charge. Exempt is not zero-rated. An exempt supplier charges no tax and cannot recover the tax on its own inputs, which is a worse position than a zero rate and looks identical on the invoice.

Toman and rial

This is the part that actually costs people money, and it is not arithmetic.

	Rial	Toman
What it is	the legal currency, ISO code IRR	a customary unit worth ten rials
Where you see it	invoices, tax returns, banknote text	shop prices, menus, conversation

The rate is the same in both. Ten per cent of a price is ten per cent of that price whatever unit counts it, so the percentage, the fraction and the arithmetic do not change — only the number of digits does.

What breaks is a calculation that mixes them. A net figure read as toman and a tax figure read as rial produces an answer that is wrong by a factor of ten and entirely plausible on the page. So: convert once, at the start, and work the whole thing in one unit.

This tool is unit-agnostic by construction. It formats through the rial because that is Iran’s ISO currency, so a figure you typed as toman will come back labelled as rial — the number is right and the label is the compromise every Iranian price display makes.

Before you read on

A menu prices a dish at 500,000 toman. What is that in the rials an invoice is written in?

• A50,000 rials.

  The wrong way round — the rial is the smaller unit, so the figure gets bigger, not smaller.

• B5,000,000 rials.

  Yes. One toman is ten rials.

• C500,000 rials — the unit is only a name.

  They are genuinely different units, and this is exactly the mistake that costs a factor of ten.

5,000,000 rials, because one toman is ten rials. The rate is the same in both: ten per cent of a price is ten per cent of it whatever unit counts it, so the percentage, the fraction and the arithmetic never change — only the number of digits does. What breaks is a calculation that mixes them, and a net figure read as toman against a tax figure read as rial is wrong by a factor of ten and entirely plausible on the page. Convert once, at the start, and work the whole thing in one unit.

The method

Adding is a multiplication. Removing is a division: a gross of 110 including 10% is 110% of the net, so the net is 110 divided by 1.1 — or the tax is one eleventh of it.

A rate rise that made the arithmetic easier. That almost never happens:

Rate	Fraction	Usable?
9%	9/109	no — 109 is prime
10%	1/11	yes, exactly

10/110 reduces to 1/11 because both share a factor of 10, so the tax in any inclusive price is a straightforward eleventh of it. The 9% it replaced gave 9/109, which does not reduce at all.

Only the VAT is rounded, and the third figure follows from the other two, so the net and the tax always add back to the price actually charged.

The arithmetic is decimal rather than binary floating point. 10% of 1.05 is exactly 0.105 and rounds to 0.11, but the nearest double sits fractionally below it, so a naive implementation reports 0.10. At 10% that trap is everywhere — there are 4,800 amounts between 0.01 and 1,000.00 where a floating-point calculation gives the wrong minor unit.

A worked example

Adding. 100 net at the standard rate:

VAT	10.00
Net	100.00
Gross	110.00
VAT fraction	1/11

Getting back to 100 from 110 is a division by 1.1, not a 10% subtraction: taking 10% off 110 gives 99, which is 1 short. The error is the rate squared — 1% of the net.

Removing.

vat = 110.00 x 10 / 110
    = 10.00

net = 110.00 - 10.00
    = 100.00

The unit case. The same calculation on 1,100 gives 100.00 of tax and 1,000.00 of net — every figure ten times larger, the same rate, the same fraction. That is the toman and the rial in one line.

The minor-unit case. 1.05 plus 10% is 0.11 of tax — not the 0.10 a floating-point calculation reports.

These are the same figures asserted in this tool’s test file, so the page and the formula cannot drift apart without the build going red.

What it does not do

It does not offer the specific rates the VAT Act sets for cigarettes, petrol and jet fuel. Published English-language figures for those disagree — 12% and 20% under the previous Act, 15% and 25% cited for the current one — and no primary text is available here to settle it, so they go in the free rate field rather than into a band this page would be asserting. It does not decide whether a supply is exempt, which is where most of the real difficulty is. It does not convert between toman and rial, or between either and any other currency. And it holds nothing on registration, filing, or the electronic invoicing system.

For a country with no tool of its own, a VAT calculator with no rate table is the right page. German VAT and UK VAT provide sourced comparisons for how the same add/remove method behaves at different standard rates.

Adding VAT to a net amount:
  vat   = round(net x rate / 100)
  gross = net + vat

Removing VAT from a gross amount:
  vat = round(gross x rate / (100 + rate))
  net = gross - vat

Iranian rates and their VAT fractions:
  Standard from 1403   10%   1/11
  Standard to 1402      9%   9/109

A rise that made the arithmetic easier, which is
rare. 9/109 reduces to nothing; 1/11 is exact.

One toman is ten rials. The rate is identical in
both; only the magnitude changes.

round = to the nearest minor unit, half up.

Only the VAT is rounded. The third figure is derived
from the other two, so net + vat = gross exactly.