|
General criteria for admission
Foreign investments in the
mainland of Iran is governed by “Foreign Investment Promotion
and protection Act (2002)” according to which admission of
foreign investments is based on the following criteria:
1-
Bring
about economic growth, upgrade technology, enhance the quality
of the products, increase employment opportunities and
exports;
2-
Does
not pose any threat to the national security and public
interests, and cause damage to the environment; does not
disrupt the country’s economy and jeopardize the production by
local investments;
3-
Does
not entail the grant of concessions by the Government to
Foreign Investors. (Concession means special rights which
place the Foreign Investors in a monopolistic position);
4-
The
ratio of the value of the goods and services produced by the
Foreign Investments, contemplated in this Act, to the value of
the goods and services supplied to the local market, at the
time of issuance of the Investment License, shall not exceed
25 percent in each economic sector and 35 percent in each
field (sub-sector). The fields and extent of investment in
each field is determined in the by-law approved by the Council
of Ministers. Foreign Investment for the production of goods
and services for export purposes, other than crude oil, is
exempted from the aforementioned ratios.
Definitions
According to article 1 of the said Act, foreign
investment is defined as investments whether made by foreign
natural/legal persons or the Iranian natural/legal persons
with foreign origin.
The investment by foreign
governments in Iran is dependent upon
the approval of the parliament, on a case
by case basis. However, investment by foreign government
companies are deemed private.
Foreign Capital includes various types of capital,
whether in cash and/or in kind, imported into the country by
foreign investor, and comprise the following:
A. Cash funds in the form of
convertible currency, imported into the country through the
banking system or other methods of the transfer acceptable
to the Central Bank of the Islamic Republic of Iran;
B. Machinery and equipments;
C. Tools and spares, CKD parts
and raw, addable and auxiliary materials;
D. Patent rights, technical
know-how, trademarks and trade names, and specialized
services;
E. Transferable dividends of
foreign investors;
F. Other permissible items
approved by the Council of ministers.
Foreign investment admitted in
accordance with the said Act, will enjoy protections and
advantages provided for therein. Such Investments are admitted
through the following routs:
A.
Foreign direct investment (FDI) in
fields where the activity of the private sector is
permissible;
B.
Foreign Investments in all sectors within the framework of
“Civil Partnership”, “Buy-Back” and “Build-Operate-Transfer” (BOT)
schemes where the return of capital and profits accrued is
solely emanated from the economic performance of the project
in which the investment is made, and such return of capital
and profit shall not be dependent upon a guarantee by the
Government or government companies and/or banks.
Note:
as long as the investment in “Build-Operate-Transfer” (BOT)
scheme referred to in the preceding paragraph, and its accrued profits are
not amortized, the exercise of ownership right by the Foreign
Investor over the remaining capital in the recipient economic
enterprise is permitted. Furthermore, if, as a result of
promulgation of legislation of Government decrees, the
execution of the financial agreements approved within the
framework of this Act is prohibited or interrupted, the
resulting losses, up to a maximum of installments at maturity,
will be provided and paid by the Government.
Authority
The “Organization for Investment, Economic and Technical
Assistance of Iran”, is the sole official authority for the
promotion of Foreign investment in the country, and for
investigation of all issues pertaining to Foreign Investments.
Applications of Foreign Investors in respect of issues such as
admission, importation, employment and repatriation of capital
is submitted to the “Foreign Investment Board” which has been
established by the Organization, under the chairmanship of the
Vice Minister of Economic Affairs and Finance, who is
ex-officio the President of the Organization, comprising of
Vice Minister of Foreign Affairs, Vice President of the State
Management and Planning Organization, Vice Governor of the
Central bank of the Islamic Republic of Iran and vice
ministers of relevant ministries, as the case requires. In
relation to applications for admission, the Investment License
will, after the approval of the Board, be issued upon
confirmation and signature by the Minister of Economic and
Finance.
In order to facilitate and expedite issues related to the
admission and activity of Foreign Investments in the country,
all relevant agencies including the Ministry of Economic
Affairs and Finance, the Ministry of Foreign Affairs, the
Ministry of Commerce, the Ministry of Labor and Social
Affairs, the Central bank of Iran, the Customs Administration
of the Islamic Republic of Iran, General Directorate for
Registration of Companies and Industrial Property, and the
Organization for Protection of the Environment have designated
a fully authorized representative to the Organization by the
highest authority of the agency. These representatives act as
the liaison and coordinator for all issues related to their
respective agency vis-à-vis the Organization.
Protection/guarantee
Foreign Investments under this
Act shall equally enjoy all rights, protections, and
facilities available to local investments, and will not be
subjected to expropriation or nationalization, unless for
public interests, by means of legal process, in a
non-discriminatory manner, and against payment of appropriate
compensation on the basis of the real value of the investment
immediately before the expropriation.
Assignment of the
whole or a part of the Foreign Capital to a local investor
and/or, upon approval of the Board and confirmation by the
Minister of Economic Affairs and Finance, to another Foreign
Investor is permissible. In case of assignment to another
Foreign Investor the assignee who must have, at least, the
same qualifications as the initial investor, will replace
and/or become a partner to the former investor from the
standpoint of this act.
Repatriation
The
principal of the Foreign Capital and profits there from, or
the balance of capital remaining in the country, after
fulfillment of all obligations and payment of legal
deductions, and upon approval of the Board and confirmation by
the Minister of Economic Affairs and Finance, may be
transfered abroad, subject to a three month prior notice
submitted to the Board. The profit derived from Foreign
Investment after deduction of taxes, dues and statutory
reserves, upon the approval of the Board and confirmation by
the Minister of Economic Affairs and Finance, is
transferable abroad. Payments related to the installments of
the principal of the financial facilities of Foreign Investors
and their associated expenses, agreements for patent rights,
technical know-how, technical and engineering assistance,
trademarks and trade names, management as well as similar
agreements within the framework of the relevant Foreign
Investment, upon approval of the Board and confirmation by the
Minister of Economic Affairs and Finance, are transferable
abroad. Moreover,
transfer
abroad of the portion of the foreign capital imported into the
country within the framework of the investment license but
remained unused, is exempted from all foreign exchange, and
export and import laws and regulations.
Resolution of Investment Disputes
Disputes arising between the
Government and the Foreign Investors with regard to their
respective mutual obligations within the context of
investments under this Act, if not settled through
negotiations is referred to domestic courts, unless the Law
ratifying the Bilateral Investment Agreement with the
respective Government of the Foreign Investor provides for
another method for settlement of disputes. For a list of
countries that have Bilateral Investment Agreement with Iran
click here.
|
