the Challenges of Taxation on Video Games

The Parliament Research Center believes that due to the diversity of financial transactions and the difficulty of monitoring and controlling the virtual space, taxes from foreign games are not efficiently collected. In this regard, the center has proposed that the Ministry of Communications and the Ministry of Economy also collaborate with the Ministry of Guidance to strengthen the taxation mechanism in this area.

According to IDEA, The issue of collecting taxes from foreign games installable on computers, mobile phones, and gaming consoles is mentioned as a revenue category in budget laws. In the budget for the year 1401, this matter was pursued more seriously by the parliament, and the transparency of the expenditure of these taxes was also determined. However, the Parliament Research Center believes that there are challenges in this regard that have prevented the resolutions from being effective.

Challenges in collecting taxes from foreign games:

• The Parliament Research Center has identified six factors as reasons for the ineffectiveness of the taxation mechanism for collecting taxes from foreign games:
• Lack of any financial information from providers of foreign games installable on computers, mobile phones, etc., in the National Foundation for Computer Games.
• Diverse financial transactions and the existence of cryptocurrencies as a new form of exchange.
• The shift of game carriers from hardware to online platforms.
• The difficulty of monitoring and controlling many computer games offered in the virtual space.
• Concealment and the use of intermediaries by computer game sellers in online payment systems.
• Restrictions in some countries, based on privacy protection laws for sellers and internet service providers regarding the disclosure of their information

Solution for Improving the Mechanism of Collecting Taxes from Foreign Games

The Consultative Arm of the Parliament believes that to strengthen the mechanism of collecting taxes from foreign games, other authorities in the field of computer games should collaborate with the Ministry of Guidance (Ershad).

Therefore, the Parliament Research Center has suggested that, alongside the Ministry of Guidance, the names of the Ministries of Economy and Finance, and Communications and Information Technology be included in the text of the bill to identify distribution centers and collect taxes. Accordingly, the proposed text for amending Article 14 of the bill to add some provisions to the Government Financial Regulations Act (3) is as follows:

“The Ministry of Culture and Islamic Guidance is obliged to, in collaboration with the Ministry of Economy and Finance and the Ministry of Communications and Information Technology, identify providers of various foreign games installable on computers, mobile phones, and gaming consoles and provide this information to the National Tax Administration Organization. This organization shall collect taxes equivalent to ten percent (10%) of the selling price and deposit them into the general revenue account at the national treasury. One hundred percent (100%) of the funds obtained shall be allocated to the Ministry of Culture and Islamic Guidance’s National Foundation for Computer Games to be used in accordance with annual budget laws and, after agreement with the Organization of Planning and Budget of the Country, for the support of domestic game development.”