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The Gist of "Foreign Investment Regulation" in Iran

 

The economic development of a country calls for investments in various sectors to enhance manufacturing capabilities, optimize the standards and quality of products as well as acquire the latest and most modern technology available in the world. Such investments, in addition to creating job opportunities and upgrading the aptitude of manpower, also improve the quality of industrial products thus providing an opportunity to gain access to and compete in the international markets. As an important source of investment, foreign investment can be acquired and harnessed for the development and progress of the country provided a suitable policy to attract and protect such investment is adopted. Foreign investment may be in several forms such as cash, machinery and equipment and capital loans.

The most important points regarding attraction and protection of foreign investments in Iran, extracted from the prevailing laws and regulations, are as follows: Incomes, derived from employment of foreign investments that have entered the country with the permission of the government, shall be subject to protection. In case, upon the enactment of a special law, the owner is deprived of his right to ownership, the government guarantees to compensate the sustained damage. Every year, the owner of the authorized investment can repatriate the net profit derived from the operation of the investment in Iran, up to the limit determined by the law, in the same currency in which the investment was brought or calculated in Iran. With certain exceptions, industrial and mining activities, with foreign partnership, shall have second priority and shall be exempt from taxation for a period of six years. Increase in the periods of exemption, due to being located in the deprived areas of the country, shall continue to remain valid.

Investment in Free Trade Zones Certain incentives offered for investments in Free Trade Zones that have been stipulated in the laws and regulations of the Free Trade Zones are as follows: Real and legal entities engaged in any type of economic activity in the Free Trade Zones shall be exempt from payment of taxes under the Direct Taxation Act for a period of fifteen years from the date of commencement of activity stated in the permit. Commercial transactions of the zones with foreign countries, after customs registration, shall be exempt from the export and import regulations. Commercial transactions of the zones with the mainland, including passenger trade, shall be subject to the general import and export regulations.

Imports of goods produced in the Free Trade Zones into the mainland, upon the approval of the Council of Ministers, shall be exempt from payment of all or part of the customs duties and commercial benefits up to the limit of their added value. Imports of goods produced in the Free Trade Zones, whose raw materials have been totally or partially procured from within the country, shall be exempt totally or partially (in proportion to the quantity of domestic raw materials used) from payment of customs duties and commercial benefits. Entry and exit of capital and profits derived from economic activity in each zone shall be free. The relevant regulations pertaining to the attraction and protection of investment in each zone and the manner and proportion of foreign participation shall be approved by the Council of Ministers.

 

     
   
 

 
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