Iran Crypto Tax Guide

Legal Status of Cryptocurrency

• Not legal tender: The cryptocurrency is NOT recognised as legal tender in Iran. The Central Bank of Iran (the "CBI" — the "بانک مرکزی") has not authorised any digital currency as a medium of exchange for domestic transactions.
• 2018 domestic trading ban: In April 2018, the CBI prohibited the domestic financial institutions (the banks, the exchange houses, the credit institutions) from dealing in the cryptocurrencies, including the Bitcoin and the other digital assets. The ban was extended to the peer-to-peer trading platforms in 2019.
• Regulatory ambiguity: Despite the trading ban, the cryptocurrency is not explicitly illegal for individuals. The legal status of holding, transferring, and trading crypto by individuals remains in a grey area — there is no law that criminalises the possession or the private trading of crypto.

Cryptocurrency Mining

• Legal and regulated: The cryptocurrency mining (the "استخراج ارز دیجیتال" — the "digital currency mining") has been legal in Iran since 2019. The miners must obtain a licence from the Ministry of Industry, Mine and Trade (the "وزارت صنعت، معدن و تجارت" — the "MIMT").
• Industrial taxation — 25%: The licensed mining activity is classified as an industrial activity and is subject to the standard corporate income tax rate of 25%. The miner must file annual tax returns and pay the tax on the mining income (the value of the mined coins at the time of receipt).
• Electricity subsidy removal — 2022: Until 2022, the mining farms benefited from the subsidised electricity rates. The government removed the electricity subsidy for the mining operations in 2022, and the miners now pay the export-parity electricity prices (the "قیمت برق صادراتی" — the "export electricity price").
• Reporting obligations: The licensed miners must report the monthly production volume, the electricity consumption, and the tax calculations to the MIMT and the Tax Affairs Organization. The failure to report may result in the licence revocation and the penalties.

Crypto Trading and Exchanges

• Trading — grey area: The domestic crypto trading (the buying and selling of the cryptocurrencies against the Iranian rial) is not explicitly regulated. The peer-to-peer (P2P) trading platforms and the Telegram-based OTC markets operate in a legal vacuum. The individuals who trade crypto on these platforms do so at their own risk.
• Licensed exchanges — IME (2022): In 2022, the Iran Mercantile Exchange (the "IME" — the "بورس کالا") launched a regulated platform for the crypto asset trading. The crypto exchanges must obtain a licence from the IME and comply with the anti-money laundering (AML) and the know-your-customer (KYC) requirements.
• Licensing requirements: The IME-licensed exchanges must maintain the minimum capital, implement the AML/KYC procedures, segregate the client funds, and report the suspicious transactions to the Financial Intelligence Unit.
• Foreign exchanges: The Iranian residents may access the foreign crypto exchanges (e.g., Binance, Kraken) but face the capital controls and the banking restrictions that make the deposits and the withdrawals difficult.

Capital Gains Tax Treatment

• Unclear treatment: The Tax Affairs Organization has NOT issued specific guidance on the taxation of the capital gains from the crypto trading by individuals. The crypto capital gains are not explicitly listed as taxable income under the Direct Tax Act.
• Potential theories: The tax lawyers debate three possible treatments: (1) the capital gains are NOT taxable because they are not listed as a taxable category under the law; (2) the capital gains are taxable as "miscellaneous income" (the "درآمد متفرقه" — the "miscellaneous income") at the progressive IIT rates; (3) the capital gains are taxable as "business income" if the trading is conducted with the frequency and the intent to profit.
• Risk of retrospective taxation: There is a risk that the TAO may introduce the retrospective legislation or the regulations to tax the past crypto gains. The taxpayers should maintain the detailed records of all crypto transactions (the dates, the amounts, the counter-parties, the wallet addresses) to prepare for the potential future tax assessments.

FAQs

Is crypto mining taxed differently for individuals?

No. The mining is taxed as an industrial activity at the corporate rate of 25%, regardless of whether the miner is an individual or a legal entity. The individual miners must register as a sole proprietorship (the "شخص حقیقی" — the "natural person") for the tax purposes.

Are crypto-to-crypto trades taxable?

There is no clear guidance. If the capital gains are eventually classified as taxable, the crypto-to-crypto trades would likely be treated as taxable events. However, until the TAO issues the guidance, the position is uncertain.

Can I use crypto to pay for goods and services in Iran?

The merchants are not prohibited from accepting crypto as a payment method. However, the CBI ban prevents the banks from processing the crypto transactions, so the practical use of crypto for everyday payments is limited.