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Iran investment manual


I.R. Iran’s Foreign InvestmentManual

                  The government of I.R. Iranwelcomes foreign investments and urges all the foreign investors to attentivelyperuse Iran’s Foreign Investment Promotion and Protection Act (FIPPA) and itsexecutive bylaws to know their own rights and be informed of the facilities andprotections they may enjoy as well as the legal obligations and requirementscaused by investing in Iran.
In this manual, first the process oflooking into the applications by foreign investors to the InvestmentOrganization of Iran is briefly discussed. Then, some articles from FIPPA andits bylaws, referring to guarantees given to the investors, their rights, facilities granted, the protection extended as well as their commitments andobligations will be offered. The last section is devoted to entry andregistration procedures for foreign investments once the investment permit isissued.

   Theprocess of examining the applications by foreign investors to the investmentorganization of Iran up to permit issuance

The foreigninvestors who would like to make investments in Iran within the framework ofIran’s Foreign Investment Promotion and Protection Act (FIPPA), need to firstfill out a special form (to be obtained either in person or on-line ) andsubmit it to the organization. The application is presented by the InvestmentOrganization to the Foreign Investment Council and will be pursued until apermit is issued.
Choosing the form depends on the type of the foreigninvestment and the agreement concluded between the parties (domestic and foreigninvestors). The form has to be submitted in English except for when the investoris an Iranian expatriate or from Persian-speaking countries like Tajikistan orAfghanistan.

  Guarantees andprotections:
- Foreign Capital is guaranteed againstnationalization and expropriation, and in such cases the Foreign Investor shallbe entitled to receive compensation (Article 9 of the FIPPA).
- Should lawsor government regulations lead to prohibition or cessation of approved financialagreements within the framework of this Act, then the government shall procureand pay the resulting damages (Article 17 of the FIPPA& Article 26 of thebylaws).
- The purchase of goods and producer services of the foreigninvestment is guaranteed in cases where a state-run organ is the only buyer orsupplier of a product or producer service at a subsidized price (Article 11 ofthe bylaws).

Rightsand facilities:
- Foreign investments subject to thisAct shall enjoy the same rights, protections and facilities available todomestic investments in a non-discriminatory manner (Article 8 of theFIPPA).
- The Foreign Investment and its profits may be transferred inforeign currency or goods (Articles 13-18 of the FIPPA).
- Acceptance offoreign investments in all the production, industrial, agricultural, transportation, communications, and services  fields as well as in fieldsrelated to water, power, and gas  supply and energy fields
- The possibilityof the referral of investment-related disputes to international authorities(Article 19 of the FIPPA).
- The possibility of land ownership in the name ofthe company (registered in Iran) in joint ventures (Article 24 of thebylaws).
- Issuance of visas for three years in Iran for foreign investors, managers, experts and their immediate family members and the possibility of visarenewals  (Article 20 of the FIPPA& Article 35 of the bylaws).
- Theinvestors are notified of the final decision regarding their applications withinat most 45 days (Article 6 of FIPPA)
- Having a choice to choose theinvestment method in the project as FDI or Foreign Investment in all sectorswithin the framework of “Civil Participation”, “Buy-Back” andBuild-Operate-Transfer” (BOT) schemes (Article 3 of FIPPA).
- Acceptance ofinvestments by any natural or legal non Iranian or Iranian person utilizingcapital of foreign origin and granting the facilities envisaged in FIPPA to them(Article 1 of FIPPA).
- The foreign investor must choose an audit instituteout of the audit institutes recognized by the Association of the OfficialAuditors of Iran to substantiate their financial and annual reports (Articles 1, 22-23 of the bylaws).

  Legalcommitments and obligations of the investors
- Applications of Foreign Investors in respect of issues such as admission, importation, utilization and repatriation of capital under the FIPPA shall besubmitted to the Organization shall only be submitted to The Organization andfollowed up through it (Article 5 of FIPPA).
- The Organization should benotified of any changes in the name, address, legal shape, or nationality of theforeign investor or of changes of more than 30% in his/her ownership (Article 33of the bylaws).
- It is necessary for the investor to notify the Organizationof the transfer of all or part of his/her Foreign Capital to other investors. Incase of transfer to another foreign investment, it is needed to obtain theapproval of the Council and the permits from the Organization (Article 10 ofFIPPA).
All the applications of the foreign investor for transferring theprofit, capital and the proceeds from the increase in the capital value underFIPPA must be submitted to the Organization accompanied by the report of  theaudit institute that is recognized by the Association of the Official Auditorsof Iran (Articles 22-23 of the bylaws).
- The investor is obligated to bringa portion of the capital into Iran to implement the approved project over theperiod of time specified by the foreign investment license which is usually 6months. Otherwise and in order to extend the validity of the license and preventit from being revoked, the investor is required to submit his/her reasons andjustifications for the delay to the Organization (Article 32 of thebylaws).
- The foreign investor is required to announce the entry of itscapital including cash and non-cash items to the Organization within theframework of the license issued for the foreign investor so that they will beregistered in the Organization and subjected to FIPPA. Failure to register theentered capital is tantamount to not being covered by the FIPPA.  (Article 11 ofthe FIPPA& Article 24 of the bylaws)
- The Iranians who intend toutilize capital of foreign origin in Iran and wish to be subjected to FIPPA mustbe involved an economic and trade activities abroad and need to submit therelevant documents to the Organization (Article 5 of the bylaws).
- Acceptance of foreign investments in the existing Iranian enterprises andeconomic companies (purchase of shares) is possible provide that added value iscreated in that economic unit after the purchase of shares.


  Otheradvantages and facilities:
- Foreign investors cansupply a portion of their capital from domestic and international sources asloans. Needless to say, the borrower will have to guarantee the repayment of theloans received.
- Foreign capitals can enter the country as cash currency, machinery and pieces of equipment, raw materials, technical know-how, and otherforms of intellectual property and they will be promoted and protected.
- 80% of the incomes made by the producer and mineral units based in lesser developedzones will be exempt from tax for 4 years.
- 100% of the incomes made by theproducer and mineral units based in lesser developed zones will be exempted fromtax for 10 years.
- Tourist installations are exempt from annual tax for50%.
- 100% of the income generated by the exporting industrial andagricultural, conversion industries goods and their completion are exempt fromtax.
- 50% of the incomes generated by exporting goods aimed at developingthe non-oil exportations   are exempt from tax.
- 100% of the incomesgenerated by exporting transit goods are exempt from tax.
- Re-investmentsmade by cooperative and private companies aimed at developing, restoring andcompleting industrial and mineral units will be exempt from tax for50%.




Ministry of foreign affairs,
Islamic Republic of IRAN,
All Rights Reserved - 2014