9% VAT or 10% Service Charge? What You Must Know About Tehran Restaurant Bills (2025 Update)
One of the most common questions when visiting good and popular restaurants in Tehran relates to the amount of Value Added Tax (VAT) and Service Charge added to the final bill. Being aware of these costs not only helps you budget better but also prevents any confusion or miscalculation.
Value Added Tax (VAT) in Iranian Restaurants
Value Added Tax (an indirect tax) is a mandatory and legal amount that, by law, must be paid by the final consumer.
Legal VAT Rate
Approved Rate: According to the current Iranian tax system law, the Value Added Tax rate for general goods and services (including restaurant and eatery services) is currently set at 9% (nine percent).
Method of Calculation: This 9% is added to the total invoice amount for the sale of goods and services (excluding certain potential exemptions on raw materials), and the restaurant owner is obliged to list it separately on the invoice.
Which Restaurants are Subject to VAT?
All restaurants, chelo-kababi houses, traditional teahouses (sofreh-khaneh), chain fast-food restaurants with the same commercial brand, reception halls, industrial and home-based kitchens and catering services (under specific conditions) that have suitable space for serving and hosting customers and meet the criteria for registration in the tax system are obliged to charge 9% Value Added Tax.
Important Note: Failure to include the 9% VAT on official invoices is considered a violation, and the restaurant owner is strictly obligated to clearly display this legal amount on customer invoices.
Service Charge in Tehran Restaurants
The Service Charge is an amount added to the invoice for additional services such as hosting, cleaning, and personnel, beyond the menu price and VAT. Unlike VAT, which is a national tax law, the Service Charge is determined based on the industry and the restaurant’s decision.
Permitted Service Charge Rate
Approved Limit: Based on the regulations of trade unions (such as the Tehran Union of Restaurant and Self-Service Owners), charging a Service Charge by restaurants is permissible up to a maximum of 10% (ten percent) of the total invoice amount (before calculating VAT).
Mandatory Disclosure on Invoice: Restaurants planning to collect a Service Charge are obliged to clearly announce this to the customer in their menu, at the entrance, or on the invoice.
Difference Between Service Charge and Tip
The Service Charge is an amount mandatorily added to the invoice, whereas a Tip is completely optional and depends on the quality of service and customer satisfaction. The Service Charge can contribute to the income of the restaurant staff
Frequently Asked Questions (FAQ)
1. Is the Service Charge mandatory?
Legally, if a restaurant has clearly announced the Service Charge amount (up to the 10% limit) on its menu or invoice, its collection is permissible. However, many modern restaurants choose not to levy it.
2. To what amount is the 9% Value Added Tax (VAT) added?
This 9% is added to the total invoice amount, which includes the price of food, beverages, and, if applicable, the Service Charge.
3. How can one report tax violations or unauthorized collection of a Service Charge?
To report cases suspected of tax evasion or the illegal collection of taxes and duties, you can refer to the Comprehensive System for Reporting Tax Evasion of the National Tax Administration (NTA) and follow up on the issue.
