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The Gist of “Foreign Investment
Regulation”
in Iran
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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.
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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.
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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.
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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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