Rules and Regulations
- Admission Regime
- The trustee of acceptance and support from FI in I.R. Iran is up to which organization?
The investment organization and economical and technical helps is the only central , governmental institute , which on the bases of law is responsible for it . The permission for foreign investment is issued by the organization.
-Is getting permission necessary for all the FI?
Yes, it is necessary to get permission for all the foreign investment, the license for these kinds of investment are issued by the signature of the minister of economical affairs and finance, i.e. any FI needs separate permission.
-What is the process of issuance to FI? Which documents are necessary?
Process of issuance of license is very simple and short .Request of F. investor will go to the organization and in 15 days will be reported to the board of FI. And after that the permission will be issued the needed documents would be a form of application, and other documents which are mentioned on the form.
-what services are offered by the investment organization to the FI?
The organization offers consultancy in all the related fields, and for this F. investor will have contact with the FI service center organization and this will save time and energy for the F. investors.
-What does investment service center mean?
Investment service center is a center for F. investors which are located on the organization, on this organization there are representatives from different offices and to help and answers to the follow ups down by the investors, and because investors will refer only to 1 organization then they will save time and energy.
-Does organization offers other helps, rather than consultancy?
The organization besides offering consultancy services offers the followings too:
-present all the rules and regulations about foreign investment
-introducing the opportunities for FI
-cooperation with different organizations for getting their inquiries for investment
-finding suitable counterparts including domestic of foreign
-doing current affair and trying to solve disputes of investors
-planning visiting and holding meetings with different organizations
- promotion and protection of foreign investment law (PPFIL)
-what is the law applied to the foreign investment in Iran?
The law applied to the foreign investment in Iran is “PPFIL” approved on 1381 (2002) which on this text we would call it foreign investment law [FIL] the realm which this law covers is all the land of I.R. Iran and all the foreign investment can invest on the bases of this law in the country.
-what is the role of (PPFIL) on FI on free trade zone?
Although FI in free trade and industrial zones obey the regulations on investment in free areas but this is possible for foreign investors, to invest in free area and enjoy the facilities of the law.
-what does” protection” mean on FIL?
We mean by protection enjoying special facilities which on the bases of FIL is prepared for the investor. In other world those investment which are down through different ways rather than the law will not enjoy those facilities.
-what are these rights and facilities?
The most brilliant rights which belong to the foreign investor are as follows:
-The right to transfer the interest and capital and its earnings in foreign exchange.
-The right to get loss which is resulted from taking away the possession and becoming foreign capital, as national.
-Getting loss resulted from approving laws which will shop project and agreement of foreign investor .
-Enjoying the equal condition with the domestic investors.
-are there other facilities for foreign investors?
Yes other facilities written on the PPFIL and its regulations are said are as follows:
-Transferring the gained money from investment and technology transfer.
-Transferring the capital and the interest gained from it.
-The possibility of referring disputes to international courts .
-Using foreign experts on the investment related affairs.
-Exporting without commitment to bring back the gained interest.
-Keeping the foreign exchange [which is resulted from export] out of the country.
-Not commitment to obeying the rules about pricing, distribution, and other domestic rules.
-on investment permission what issues are subjected?
On investment, Iranian and foreign, the counterparts kind of the method of investment, percentage of the share and the amount of F I, the way to convey the interest and other conditions about investment are explained.
-who can invest in Iran?
All the legal and real entities or companies, institutes international organizations and also real and legal entities from Iran which their capital originated from foreign countries can invest and enjoy it benefits on the bases of PPFIL
-is it possible to cover Iranian investment with FIL?
The bases of PPFIL and enjoy its facilities on the bases of PPFIL and enjoy its facilities but the origin of their capita should be foreign and beside it he/she should give documents that show their economical activities in out of Iran
-does permission for investment has a limited valid time?
Yes , and if on the given the foreign investor did not bring a parts of foreign capital to Iran , his permission for investment will be omitted , it is necessary to say that for each project the group of expert have allocated a time to do it .
-How we can extend the license of investment
Foreign investor before finishing the time of validity of the permission , by giving acceptable reasons will apply to extend the permission , the board of investment with study the request of extending and in case of accepting with give an extra time to the investor.
-Do foreign governmental companies can invest in Iran on the bases of PPFIL?
Foreign governmental companies can invest in Iran on the bases of PPFIL.
-What are the FI fields in Iran?
FI fields in Iran are really various and all fields of production such as , industry , mine , agriculture services and all activities which end to production and constructive activities .
-Doing just trade activity can be considered FI?
Doing just trade activity can be considered as FI , but doing it along side with production which complete production trend on the approved projects is possible.
-Is FI on services will be supported?
FI on services sector can be supported and will enjoy the benefits of this law.
-Does government support will cover the FI automatically?
For enjoying FI law, the investment should have permission on the bases of this law.
-Proviously invested projects and is not supported how and when can be supported by the FI law?
Previously invested projects if got the permission and had new value added can be covered by FIL.
-Is it possible to have FI on the existing projects?
Regarding the FIL there is no difference between existing projects investment and a new project. and all the foreign investors can invest on new or existing projects but on the existing corporations in order to benefit from the advantages of FI it is necessary to get permission and this investment should add new value added , and can end to increase on investment and enhance management , expand export and increase of technology , on the same corporation .
-How FI is acceptable on economical corporations?
Regarding the acceptance regulations, these types of investment after getting permission, if added a new value can be covered by the law and enjoy its benefits.
-If a foreign investor decided to invest on an existing company and buy its share, what are the ways to increase investment?
Foreign investor can besides buying share, through registering new share or use the right of other share holder’s stat to take part on increasing the capital of company.
-Agreements for construction. Utilize and selling (BOT) on which framework falls?
The suggested structure for agreements BOT and others (like BOOT and BOO and ...) can be done through registering a branch of FI in Iran and by establishing an Iranian (Project Company).
-What do we mean by possessive right?
We mean by possessive right, the right which is gained by possession of assets which is gained by agreement which is recognized on the FI, which is extended to the possession, utilize and exploitation.
-What do we mean by possessive right on BOT projects?
Possessive right is the possession which is gained by agreement and could be transferred to the Iranian counterparts.
-Is it possible to have a bank account in out of Iran to have the income gained from legal export?
Opening an account in out of Iran to keep the income gained from foreign investment and its export is legal and it means the access of foreign investor to exchange gained from export, and for getting the interest of the share and other payments.
-If there is a must for returning the foreign exchange from export to common companies and investment units?
No, all in all there is no commitment to return the capital gained from export, and it is up to the investor to use it in any case he wants
- Can investor insure his capital? What kind of insurance?
Foreign investor can insure capital for non-trade dangers [political] with the insurance companies of the country. If because of the agreement of insurance investor got some money, the insuring institute as the vice president of the investor asks for loss which is related to the investor.
- Disputes between the Iranian and foreign investors and government and foreign investor, where should be solved? How to solve these kinds of problems?
Related to the agreement between the investors, and is considered as the internal agreement. But if the dispute is between the Iran’s government and the foreign investor, referring the dispute to foreign and international courts is on the bases of agreement between Iran’s government and the government of F. investor.
The Law of encouragement and protection of foreign investment
Features and Facility of the Law
• No limitation on the size and percentage of foreign investment participation
• Possibility of registration of Iranian companies with 100% foreign capital
• Possibility of transferring capital, capital interests, and benefits from the use of capital in form of currency or commodity
• Possibility of enjoying equal treatment as domestic investors for foreign investors
• The possibility of investing for foreign natural and legal entities and Iranian people living abroad
• The possibility of investment for the private sector in all areas
• Granting coverage to all foreign investment methods
• Short and fast process of acceptance and approval of foreign investment application
• Issuing a three-year residence permit for investors, managers, foreign experts, and their next of kin
Risks covered by law
• Expropriation and nationalization
• Indefinite transferring the principal capital and its profits
• Guaranteed purchases of manufactured goods and services in foreign investment plans in form of BOT method, if he is the exclusive buyer of that state.
Income from all agricultural activities, animal breeding, animal husbandry, breeding of fish and bees, poultry farming, fishing, sericulture, regeneration of forest pastures, gardens of any kind and producing dates are exempt from tax. All individuals, both natural and legal (Iranian and non-Iranian), can benefit from the exemption from the beginning of the activity.
Fifty percent (50%) of employee income tax in less developed areas is forgiven according to the Directorate of Management and Planning of the country.
All natural persons (both Iranian and non-Iranian) working in less developed areas can benefit from this privilege, according to the list of the organization and management and planning of the country, as long as their place of employment is on the list.
Exemptions for training activities and sports services
Income from nonprofit school education including primary, secondary, high school, technical and vocational, universities and nonprofit higher education centers and the income of mentally and physically handicapped institutions for the maintenance of the abovementioned persons which, according to the case, are licensed by the relevant authorities, also the income of clubs and sports institutions licensed by the Physical Education Organization from sports activities, all are tax deductible.
Exemption of cultural activities
Publicity and press activities, cultural and artistic activities performed under the permission of the Ministry of Culture and Islamic Guidance are exempted from tax.
All natural and legal persons (both Iranian and non-Iranian) can benefit from the exemption by observing the rules and regulations subject to Note 3 of the abovementioned article.
One hundred percent of the income of rural, nomad, agriculture, fishermen, workers, employees, and student’s cooperatives are exempt from tax.
A: One hundred percent of revenue from exports service, non-oil goods, and agricultural products and 20% of the revenue from raw materials exports are taxed at zero rate.
B: One hundred percent of revenue from exporting various goods imported and brought to Iran in form of transit and are issued without modification in nature or by doing anything on it, all are exempted from tax.
Exemptions of handcraft products
Income of handmade carpets, handicraft workshops, cooperative companies, and relevant trade unions are all exempted from tax. All natural and legal persons (both Iranian and non-Iranian) can enjoy the exemptions by observing the rules.
Exemptions for manufacturing, mining and tourism activities
Income tax at a rate of zero percent
Industrial, mineral & service (hospitals & hotels) and residential tourist centers
Industrial, mineral & service (hospitals & hotels) and residential tourist centers based in all special economic zones and industrial estates in the mainland
Industrial, mineral & service (hospitals & hotels) and residential tourist centers in less developed areas
Industrial, mineral & service (hospitals & hotels) and tourist accommodation centers located in all special economic zones and industrial estates in less developed areas
100% income from all agricultural activities
100% of income from exports of non-oil products and services and agricultural products and 20% of the revenue from the export of raw materials
* If the companies with more than 50 employees increase their workforce by at least 50% every year compared to the previous year, for each year increasing staff, one year will be added to their tax exemption.
** Foreign companies using the capacity of domestic production units in Iran to produce products with a reputable brand, they will benefit from 50% discount on tax rate (12.5% instead of 25% income tax rate) compared to the revenue earned from the sale of manufactured goods after the expiration of the tax exemption period in the table, if they produce at least 20% of the manufactured products.
• Exemption of machinery and equipment production line from payment of customs duties (first-hand machinery)
• Repayment of paid customs duties for the import of raw materials used for the production of export goods.
Facilities and tax incentives to invest in free and industrial zones
• 20-year tax exemption for any type of economic activity
• No need for a visa for foreigners to enter the country
• No Limitation on currency transfers
• Flexible monetary and banking services
• Exemption from customs duties for import of raw materials and industrial machinery manufacturing units
• Easy registration of companies, industrial enterprises, cultural institutions and intellectual property
• Simple formalities for re-export and transit of goods
• Convenient rules for importing authorized goods
• Possibility to export goods produced to the mainland within the framework of the value added system
• Selling/renting land for Iranians and long-term lease of land for foreigners
• Proper rates for energy consumption
Other incentives and benefits of investment in Iran:
• Unique geographic location at the center of the Middle East, Asia and Europe
• Extensive growing domestic market with a population of nearly 80 million and quick access to neighboring markets with over 300 million people.
• A huge reserve of trained, efficient and cost-effective human resources
• A network of infrastructure developed throughout the country in the areas of telecommunications, energy and, road and rail transportations
• Massive energy reserves in the country and low production costs and public services
• benefiting from four-season weather as an advantage to carry out agricultural activities throughout the country and in all seasons.