Court Annuls Flavored Milk VAT Exemption Exclusion

Effective from

28 January 2026

Issued by

Trade Development Organization of Iran

Reference

No. 7038233

Iran’s Trade Development Organization, through its Office of Export and Import Regulations, has forwarded to Iran Customs’s Import Office a petition and ruling to annul a prior notice regarding value-added tax (VAT) liability for flavored milk. The action follows Ruling No. 14043139000220-1280 issued by the General Board of the Administrative Justice Court on 1404/08/27, in a case brought by Mr. Bahman Zabardast against the Tax Affairs Organization of the Country and the Trade Development Organization of Iran.

The claimant sought annulment of the phrase “with the exception of flavored milk varieties” appearing in the third column of row (4-8) of the table attached to VAT Deputy letter No. 15890 dated 1390/12/03 of the Tax Affairs Organization, as communicated to Customs via Import Office letter No. 90/2107223 dated 1390/12/13. The claimant argued that under Clause 4 of Article 12 of the 1387 VAT Law, milk supply, import and offering are exempt from VAT absolutely and without condition, and that this absolute exemption is echoed in the 1400 VAT Law (Part 1-5 of Clause 5 of Paragraph (A) of Article 9); since the exemption is absolute, excluding flavored milk from it lacked legal basis, and the Trade Development Organization had no legal authority to communicate such a tax exclusion to Customs on its own.

In its ruling dated 1404/08/27, the General Board of the Administrative Justice Court found that, under Clause 4 of Article 12 of the 1387 VAT Law, supply, offering and import of milk are exempt from tax and duties absolutely, consistent with the Court’s own prior rulings (including Ruling No. 140109970905810953 dated 1401/05/25 and Ruling No. 140109970905811263 dated 1401/07/12), which held that exemptions under VAT law cannot be narrowed to exclude goods covered by those laws absent express statutory basis. The Court held that excluding “flavored milk varieties” from the exemption, based on the flavored characteristic, exceeded the scope of the exemption set out in Article 12 of the VAT Law, was contrary to law and outside the bounds of authority, and ordered the notice provision annulled effective the date of the ruling, under Articles 13 and 88 of the 1392 Law on the Administrative Justice Court.

Following the Court’s ruling and its communication to the Trade Development Organization’s Legal Affairs Office, the organization has instructed Iran Customs to remove the phrase “with the exception of flavored milk varieties” from the third column of row (4-8) of the table attached to Tax Affairs Organization letter No. 15890 dated 1390/12/03, and to notify executive customs houses accordingly.

Key Details

• Approval authority: Ministry of Industry, Mine and Trade
• Responsible organization: Not specified
• Classification: Law
• Affected procedure: Customs Clearance
• Document number: 7038233
• Unique identifier: 404110731097
• Document date: January 20, 2026
• Publication date: January 27, 2026
• Effective date: January 28, 2026
• Expiration date: Not specified

This summary is provided for orientation only. The official Persian text issued by the relevant Iranian authority is the governing version.