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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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In what sectors foreign investment under contractual arrangement is permissible?

Foreign investment under contractual arrangement is permissible in all sectors of economy. However, foreign investment in sectors reserved for the Government may only be carried out under contractual arrangements.

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asked 04/12/2021 19:12
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What legal structure do you recommend for foreign investment?

There are seven types of juridical entity or company which can be established under the Iranian Commercial Code. From among all these different types, Joint Stock Company, in which the capital is divided by shares, is the most common and acceptable type of company which can be recommended to foreign investors (For further information please refer to "Establishing a Joint Stock Company in Iran" published by OEITAI).

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asked 04/12/2021 19:12
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Is it obligatory to have local partner(s)?

Of course not. It is by no means obligatory to have local partner, but in most cases foreign investors themselves are willing to take advantage from their local partners for the reason that they are more familiar with the business environment, regulatory and administrative requirements and opportunities locally available.

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asked 04/12/2021 19:12
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Is there a ceiling for foreign investment in Iran?

There is no minimum and maximum for foreign investment in respect of percentage of shareholding, nor is any restriction on the amount of investment for foreign investment in Iran.

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asked 04/12/2021 19:12
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If there is no restriction imposed in Iran, then what message a prospective foreign investor should get from the ratios of 25% and 35% referred to in Para ...

The ratios referred to in the said Para have nothing to do with the shareholding percentage of foreign investors in a single investment case. As formerly explained, no restriction with respect to the ceiling of foreign participation is imposed in Iranian companies. In fact, these ratios illustrate the proportion given to the value of goods and services produced by foreign investment in the global economy in each sector and subsector respectively, verified at the time of issuance of the foreign investment license (i.e., value of foreign products in GDP).

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asked 04/12/2021 19:11
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Is foreign investment permissible in oil and gas upstream activities?

Foreign investment in oil and gas upstream activities within the framework of contractual arrangements is permissible, but Foreign Direct Investment (FDI) in such areas is not permitted.

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asked 04/12/2021 19:11
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Is it permissible to use foreign trade marks and names in foreign investments?

Application of trade marks and names is permissible in all areas of economic activity.

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asked 04/12/2021 19:11
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Is foreign investment allowed in companies quoted in the Stock Exchange Market?

There is no restriction for investment in companies quoted in the Stock Market. Foreign investment in these companies are eligible to enjoy the protections available under FIPPA, in the same manner as is available to foreign investment outside the Stock Market .

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asked 04/12/2021 19:10
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How do you define Special Economic Zones in Iran and in which areas of the Country these so-called zones have so far been established?

Special Economic Zones are restricted customs areas in which import of goods, machinery and equipments is not subject to the general import/export regulations. The zones may have been established for different reasons and objectives. Some of them are established for the purpose of warehousing whereas some, in addition to warehousing of goods, are designed for setting up processing and production line. At present the number of Special Economic Zones reaches to 17 (For more information please refer to website  www.freezones.ir ) .

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asked 04/12/2021 19:10
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Is there any difference between investments made in Free Trade Industrial Zones, Special Economic Zone and the mainland?

Investment in Free Zones is subject to especial regulations governing such investments. Iranian Free Zones at present comprise six areas by the name of Gheshm, Kish, Chahbahar, Arwand, Aras and Bandar Anzali. Areas known as Special Economic Zones are part of the mainland in which all investments are considered to be investments in the mainland. Taking into consideration the applicability of Foreign Investment Law to the territory of the Islamic Republic of Iran, all foreign investments realized in Free Trade and Industrial Zones may also enjoy the privileges of FIPPA, provided that the relevant formalities for obtaining the ...

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asked 04/12/2021 19:10
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What is meant by the terms Iranian Company and Foreign Company, from the standpoint of Iranian laws and regulations?

The term Iranian Company refers to a company incorporated and registered in Iran according to Iranian Commercial Code, even if a hundred percent of its shares or stocks belong to foreign natural or juridical persons. The term Foreign Company refers to a company incorporated and registered outside Iran.

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asked 04/12/2021 19:09
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Is it possible for foreign companies to establish legal bases in the form of branches or representative offices in Iran?

Of course yes. Any foreign company, for the purpose of expanding its commercial activities, performing its contractual obligations, carrying out marketing activities, etc. may establish a legal permanent base in the form of branch or representative office in Iran. For establishing a branch or representative office certain procedure should be followed under the Law for Establishing Branches and Representative Offices. For this purpose the applicants are advised to refer to the General Directorate for Registration of Companies and Industrial Property.

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asked 04/12/2021 19:09
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Is the establishment of branch or representative offices considered as foreign investment?

Establishing a branch or representative office is not considered as foreign investment. In fact, foreign investment can be realized by way of establishing a new Iranian company, participation in an existing Iranian company and/or entering into contractual arrangements with Iranian recipient entities.

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asked 04/12/2021 19:09
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What are the features of Industrial Estates and what facilities are available in those areas?

Industrial Estates are prefabricated Estates designed and constructed by the Industrial Estates Company of Iran, affiliated to the Ministry of Industry and Mines, readily available for investors in all industrial poles throughout the Country. Even in certain Estates, factories and industrial workshops are offered for purchase. The important feature of these estates is availability of infrastructural utilities such as water, power, gas, telephone and quick access to the main transportation network of the Country.

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asked 04/12/2021 19:09
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Is Foreign Investment permitted in Iran?

Foreign investment is permitted in accordance with the prevailing laws and regulations of the Country. All foreign investors are permitted to invest, for the purpose of development and producing activities, in all areas of industry, mining, agriculture and services. However, from the standpoint of the Iranian government, only those investments shall be eligible to enjoy the privileges and protections under the Foreign Investment Promotion and Protection Act (FIPPA) that have obtained the required license under the FIPPA.

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asked 04/12/2021 19:14
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What objectives are to be achieved by foreign investment?

The main objectives are: · Enhancing economic growth; · Increasing employment opportunities; · Access to and development of new technologies and managerial skills; · Upgrading quality of products and boosting export capabilities.

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asked 04/12/2021 19:14
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Under what legal or contractual framework, foreign investment may be admitted in Iran?

Foreign investment in Iran is admitted under all forms of legal participation (Foreign Direct Investment) and/or contractual arrangements. By contractual arrangements we mean all forms of project financing methods within the framework of civil participation, buy back arrangements, and different types of Build, Operate and Transfer (BOT) schemes.

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asked 04/12/2021 19:14
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How do you define foreign investment?

Foreign investment is defined as employment of capital in an activity in which a level of risk involved.FIPPA classified foreign investment under two broad categories : a) Legal participation (direct investment): is defined as a direct involvement of a foreign investor in the equity capital of a new or existing Iranian company. There is no restriction on the level of shareholding as well as percentage of shares belonging to foreign investors in Iranian companies. The right of foreign investor to run and control a company emanates from and is dependent upon his direct contribution in the equity ...

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asked 04/12/2021 19:14
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In what sectors foreign direct investment is permissible?

Foreign direct investment is permissible in all areas open to Iranian private sector.

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asked 04/12/2021 19:13
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What law protects foreign investment in the Islamic Republic of Iran?

The law protecting foreign investment in Iran is the Foreign Investment Promotion and Protection Act ratified in 2002 which is hereinafter referred to as FIPPA. The scope of applicability of the FIPPA extends to the territory of the Islamic Republic of Iran under which all foreign investors may invest in the Country and enjoy the privileges available there under.

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asked 04/12/2021 19:08
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What is the role of the regulations governing investment in Free Zones?

Although foreign investment in Free Zones is governed by especial regulations, foreign investors may also invest in such zones under Foreign Investment Law and take advantage of its protections.

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asked 04/12/2021 19:08
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What is meant by the term protection under FIPPA?

The term protection refers to a series of certain rights and privileges which are extended to investors under FIPPA. In other words, investments carried out under any law other than FIPPA shall not be eligible to enjoy such rights.

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asked 04/12/2021 19:08
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What are those rights and privileges?

Fundamental rights recognized under FIPPA in favour of foreign investors are as follows: - The right to transfer profits (dividends) as well as capital and gains on capital in foreign exchange; - The right to receive compensation resulting from expropriation (deprivation of ownership) and nationalization of foreign capital; - The right to receive compensation resulting from the passing of laws or Cabinet Decrees causing prohibition or interruption in the implementation of financial contracts of foreign investors; - The right to enjoy equitable treatment accorded to domestic investors.

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asked 04/12/2021 19:05
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Are there any other facilities and privileges available to foreign investors?

Other facilities and privileges contemplated under FIPPA and its Implementing Regulations are as follows:   - Convertibility and transferability of the funds resulting from various investment and transfer of technology agreements; - Possibility of submission of investment disputes to international tribunals; - Recruitment of foreign technicians in affairs related to investment projects; - Export of goods and services without any commitment to reintroduce export proceeds to the Country (i.e., no surrender commitment requirement) ; - Direct access to and possibility of withdrawal of export proceeds out of Escrow accounts established in banks outside the Country; ...

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asked 04/12/2021 19:04
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What issues are specified in the investment license?

Many issues such as area of investment, Iranian and foreign shareholders, type and method of investment, volume and percentage of foreign investment, the manner for transfer of dividend and profit gained as well as other terms and conditions pertinent to a foreign investment project are to be specified in the investment license.

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asked 04/12/2021 19:04
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