In July 2008, the Iranian government announced that a VAT mechanism would be introduced in the country by autumn, under which businesses would have to pay 3 percent of their sales receipts as tax.

The VAT controversy is further fuelling debate over the sweeping economic reform package introduced by the Iranian president.

Official figures from the Central Bank of Iran reveal that annual inflation stood at 29.4 percent in the twelve months that ended in September. Some economists predict that the current situation could prompt Tehran to face a serious budget deficit within months due to falling oil prices.

According to the Iranian president, the economic reform package submitted to parliament will eventually be able to resolve the economic problems that the country has seen in the past years.