A Comparative Analysis of the Status of Bankrupt Individuals in the Tax System (Case Study: France, the United States, and the United Kingdom Compared with Iran)
Keywords:
Bankruptcy, Tax System, Comparative LawAbstract
This study aims to conduct a legal examination of the status of bankrupt individuals within the tax systems of selected countries (France, the United States, and the United Kingdom) and to compare it with the tax system in Iran. From a research objective standpoint, this study is applied in nature; methodologically, it is theoretical and relies on a library-based data collection approach, with descriptive methods used for analysis and synthesis. The bankruptcy regulations and the tax liabilities of bankrupt individuals in the countries under investigation were found to be similar in principle, though notable differences were observed in certain aspects. All countries examined have legal mechanisms in place to manage the debts of bankrupt individuals. The general purpose of bankruptcy laws in these countries is to provide debtors with a chance for a fresh start. However, tax systems in these selected countries are complex and vary from one nation to another. The analysis reveals that in Iran, bankruptcy leads to the Tax Administration being treated as an ordinary creditor, and tax debts are thus converted into ordinary claims. In contrast, in France, bankruptcy does not eliminate tax debts, which may be collected from future income (potentially subject to adjustment). In the United States, tax debts are generally non-dischargeable in bankruptcy, except under narrowly defined exceptions. In the United Kingdom, bankruptcy typically does not eliminate tax debts either, and such debts may be collected from future income, possibly under negotiated terms. The observed differences among these countries primarily relate to the role of governmental institutions and the extent of tax exemptions provided. The overarching objective of this study is to examine these existing disparities. One critical issue at this stage involves offering legal recommendations to reform domestic legislation, with particular attention to the localization of legal frameworks. To this end, it is essential to understand the position and structure of legal institutions in the source legal system and to appropriately integrate them into the target legal system. Such reforms in tax procedures are expected to contribute to the country’s economic prosperity.
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