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Foreword:

This is a compilation of the enquiries frequently asked by potential investors willing to invest in the Islamic Republic of Iran. We hope the answers provided herein, in addition to the policy issues, would assist parties, and provide them to have access to a package of comprehensive information in respect of the legal framework for admission of investments and the manner to obtain the relevant Investment License. You may find certain questions which do not necessarily have any direct relevance with Foreign Investment as a whole ,but in light of the need for preparing a multipurpose source of information, we have tried to compile a variety of likely inquiries to respond to any question relating to doing business in Iran.Obviously , those investors who may need more detailed information on any subject , are recommended to refer to other OIETAI publications and guides;or if they wishthey may communicate directly or have meetings with the OIETAI staff who are in a position to welcome them by providing answers to any other question which is not addressed in this guide as well .Readers are kindly recommended to refer to the table of content before searching the answers to their questions in each chapter


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How the foreign exchange required for such transfers is procured?

Foreign exchange required for transfers related to foreign investments shall be procured and made available by way of purchasing foreign exchange from the banking system or out of foreign exchange earnings resulted from the export of products and/or services of the foreign investment project, as the case may be. However, the mechanism for provision of foreign exchange transfers is specified in the investment license.

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asked 04/12/2021 18:46
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Which formalities are required for transfers related to a foreign investment?

Principally, any and all foreign exchange transfers shall be made upon formal application of the foreign investor or the joint venture company or investee firm on behalf of the foreign investor. All transfers, after deduction of legal dues, are payable to the foreign investor's account.

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asked 04/12/2021 18:46
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In case specific regulations or a government decision prohibits the export of products of the investment project, how the foreign exchange related to trans...

In exceptional cases where export is not so permitted, the foreign investor is authorized to sell his products in domestic market and to purchase, from the banking system, the required foreign exchange for such transfer(s). Obviously, the foreign investor may export other authorized goods instead, should he wish to do so.

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asked 04/12/2021 18:46
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What is the rate of tax applicable to transfer of shares of other companies?

Each transfer of stocks, partnership shares, priority right of stocks and partnership shares shall be taxed at a flat rate of 4% of face value of the shares and/or partnership shares (Note 2, Article 143, Iranian Tax Code).

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asked 04/12/2021 18:45
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What is the rate of tax applicable to transfer of shares of companies listed in the Stock Exchange?

Each transfer of companies’ shares and priority right of shares, shall be taxed at a flat rate of 0.5% of the sale value of such shares and priority rights of shares (Note 1, Article 143, Iranian Tax Code).

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asked 04/12/2021 18:45
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What is the manner of computation of salary income tax of foreignemployees?

The tax rate of salary income of employees whether Iranian or foreigner, after deduction of annual exemptions provided in Article 84of Iranian Tax Code and up to IRR42,000,000 of the annual salary income, shall be subject to a rate of 10%. The rest shall be subject to a rate ranging from 20% to 35%, in accordance with Article 131of the said Code.

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asked 04/12/2021 18:44
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How to compute the taxable income in Build, Operate and Transfer (B.O.T) projects, and what is the rate?

The taxable income of foreign investors in Build, Operate and Transfer (B.O.T) contracts in Iran, shall be calculated at a fixed rate of 25% after deduction of acceptable expenditures, by way of examination of the statutory books (Article 105 and 106, Iranian Tax Code).

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asked 04/12/2021 18:44
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How the contracting business agreements are taxed?

In case of contracting businesses of foreign entities in Iran with regard to all types of work in fields of construction, installations, and technical installation including procurement and setting up of the same or transportation, preparation of design for buildings and installation, topography, supervision and technical calculations, provision of training and technical assistance, transfer of technology and other services, the taxable income will be 12% of total annual receipts. (Para“a”, Article 107, Iranian Tax Code). In the event the relevant employer of the contract is a ministry, a government institution, a state company or a municipality, then that ...

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asked 04/12/2021 18:44
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Shall the income derived from transfer of technology agreements such as technical know-how, engineering and technical services and also payments of license...

In case of granting of licenses and other rights in such agreements, which is considered as the income of foreign juridical persons, taxable income consist of 20% to 40% of all payments received by them during a tax year and shall be taxed at a rate of 25% (Note 2, Article 105; Para“b”, Article 107, Iranian Tax Code).

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asked 04/12/2021 18:43
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How is the income tax of foreign airlines and shipping companies calculated in Iran?

The tax of foreign airlines and shipping companies for passenger freight cost and the like earned in Iran, is a fixed rate of 5% of such earnings whether collected in Iran, at the destination, or on the way.

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asked 04/12/2021 18:43
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Are branches and representative offices of foreign companies which are engaged only in marketing and information collection for their parent companies abro...

No, branches and representative offices of foreign companies and banks which are engaged in gathering information or marketing in Iran for their parent companies, without any transaction right, and receive remuneration from them against their expenditures, shall not be subject to taxation in respect of such remuneration ( Note 2, Article 107, Iranian Tax Code).

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asked 04/12/2021 18:43
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Is an equal rate of tax applicable to all types of company including Iranian as well as foreign companies?

The rate of tax for all types of company, whether Iranian or foreign (branches and representative offices), is 25% that is equally applied (Article 105, Iranian Tax Code).

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asked 04/12/2021 18:42
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What is the rate of income tax for juridical persons in Iran?

The rate of income tax for juridical persons in Iran is 25% of the taxable income (Article 105, Iranian Tax Code).

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asked 04/12/2021 18:41
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What customs duties are there?

The aggregate of custom tax and duties, order registration fee and other levies on imported goods is called as customs duties which is charged at a rate of 4% of the customs value of the goods. This sum plus the commercial benefit to be determined by the Council of Ministers are referred to as import duties.

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asked 04/12/2021 18:41
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What is meant by tax exemption, and how they are realized?

Tax exemption means exemption from payment of tax on income derived from industrial, mining and producing activities. Companies in Iran are required to withhold the tax on dividend, which is considered as natural entities’ tax, and pay it to the relevant tax office (Article 132, Iranian Tax Code).

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asked 04/12/2021 18:40
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What are the tax exemptions, and in what manner they can be applied?

Tax exemption in industry, mining and producing sectors: 1. 80% of the income derived from producing and mining activities of cooperative and private sectors are tax exempted for a term of 4 years as from the date of exploitation or extraction (operation) (Article 132, Iranian Tax Code). 2. Any part of the declared profit of private and cooperative companies that is used in the same year for development, reconstruction, renovation or completion of existing industrial or mining units and/or for setting up of new industrial or mining units, is exempted from 50% of the applicable ...

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asked 04/12/2021 18:40
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Is there any requirement for enjoying tax exemptions?

Yes, industrial and mining enterprises shall enjoy tax exemptions if located out of a 120-kilometer radius from the center of Tehran or out of a 50-kilometer radius from the center of Isfahan, and also out of a 30-kilometers radius from the administrative centers of provinces and cities with a population of more than 300,000. Industrial Estates established within the same 30-kilometers radius from the later province centers and cities are exception to this rule (Note 2, Article 132, Iranian Tax Code).

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asked 04/12/2021 18:39
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Shall the establishment of manufacturing units in less developed areas result in increase of the rate and period of tax exemption?

Yes, 100% of taxable income of all units located in less developed areas shall be tax exempted for a period of 10 years.

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asked 04/12/2021 18:39
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In respect of tax exemptions, is there any distinction between the units located in Special Economic Zones and those of the mainland?

No, In respect of tax exemptions, there is no differences between the Special Economic Zones and the mainland. In fact, tax treatment is the same in all parts of the Country.

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asked 04/12/2021 18:38
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Shall export income enjoy tax exemption?

Yes, 100% of the income derived from exportation of agricultural and industrial finished goods as well as their conversional and complementary industries, also 50% of the income earned from exportation of other non-oil goods, are tax exempted (Article 141, Iranian Tax Code).

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asked 04/12/2021 18:38
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What is the tax exemption applicable to transit goods?

100% of the income derived from exportation of different goods that have been, or will be, imported to Iran on transit, and are exported without making any changes in the substance thereof, or doing any works on them, are tax exempted (Article 141, Iranian Tax Code).

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asked 04/12/2021 18:37
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Do the companies quoted in the Stock Exchange enjoy tax exemptions other than those applicable to industrial, mining, agricultural and tourism units?

All the companies listed in the Stock Exchange whose transition of shares is done by stock brokers are tax exempted equivalent to 10% of their payable tax (Article 143, Iranian Tax Code). B. Customs facilities and exemptions

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asked 04/12/2021 18:37
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Is customs exemption applicable to the raw materials imported on transit to be exported then in the form of manufactured goods?

Yes, the raw materials imported on transit for producing purposes are exempted from customs duties. Any sum paid at the time of importation for any reason, shall be refunded once the said goods are exported.

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asked 04/12/2021 18:37
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At which price are the imported second hand machinery and equipments evaluated in customs house?

All the imported goods are evaluated at new price in customs; only the second hand machinery and equipments which are imported to the Country for production line under FIPPA, are to be evaluated at second hand price.

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asked 04/12/2021 18:36
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Which facilities are offered by OIETAI for entry visa of foreign investors and experts?

OIETAI facilitates visa formalities of foreign investors, including short and long term as well as single and multi entry visas (i.e., 3 year multi entry visa with a 3 months residence permit that is renewable for 1 year), by introducing foreign investors, directors, foreign experts and their immediate family members to the Ministry of Foreign Affairs. Foreign investors or joint venture companies can apply for visa by sending the relevant specification form of applicants along with the reasons for their presence to OIETAI. It is worth mentioning that OIETAI is not the only reference for foreign investors to ...

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asked 04/12/2021 18:36
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