Foreign Investment in Iran

The Law Concerning the Attraction and Protection of  Foreign  Investment in Iran are the governing guidelines in  this  respect.  The  law Pertaining to the Establishment of Free Trade- industrial Zones in the Islamic Republic of Iran and the   Regulations   Governing   Capital   investment in the Free Trade-Industrial  Zones  in  the  Islamic Republic of Iran   have  specified  the  manner in which a foreigner can invest in  Iran. 

Foreign  investment  is allowed only in the fields of development, and industrial,  mineral  and  agricultural production, transportation, and  related  activities.  Financing  institutions  providing assistance to  Iranian  establishments, engaged in the aforementioned activities, are  also entitled to the advantages issuing from the Law.

Only  private  individuals, companies and establishments of foreign origin are allowed to invest in Iran.

Services Sector Investment

Services  performed  independently of foreign investment activities do  not  fall  under the framework of foreign investment laws, unless they  are connected to one of the said fields. 

Foreign Capital

 Foreign capital can be imported in  the form of foreign currencies, machinery, tools, spare parts, raw materials,  land,  air and sea means of transportation, patent rights, and  wages  and  salaries paid to experts in foreign exchange. All net   profits  earned  in Iran, added to the original capital or invested in  other  enterprises falling under the Law Concerning the Attraction and  Protection of Foreign Investment, shall be treated as foreign capital. 

Repatriation of Profits

In  principle,  the  transfer  of  the  original  capital and profits  accrued from it in Iran meets with no legal limitations. Nevertheless,  such  transfers  will  have  to be made in accordance with regulations    provided  by  the  international  Monetary Fund Agreement, and  fulfill all the related commitments. The owner of foreign capital must  keep at least 10 percent of his initial capital In Iran, for a period of  six  months from the date of transfer of the capital, as a security deposit  to meet his contingent obligations. The foreign investor can transfer  abroad  the  net  profit  derived from the investment of his capital  in Iran after deducting taxes, dues and and statutory reserve  requirements in the same currency din which he originally imported the  foreign capital. 

With regard to the principal of the capital, the foreign investor may  transfer  it abroad within a period not exceeding three months, unless  the  amount  of  the  capital is such that its remittance might create  foreign  exchange difficulties. In this case, a longer period before it  is  transferred  can  be  foreseen.  In  any  case,  the amount of the  remittance  in one year shall not be less than 30 percent of the total  to be transferred. 
If  the  foreign  exchange possibilities of the government do not allow   for  the  transfer  of  all  or  a portion of the profits of a foreign  investor,  the  party  concerned  will  have  the permission to export   authorized   goods   without   committing  himself  to  returning  the  export-earned foreign exchange to Iran. 

Limit of Foreign Investment

 In  the  wake  of the Islamic Revolution, various interpretations were  made regarding foreign investment in Iran. Some interpreted Article 81   of  the  Constitution  as  precluding  any  foreign  investment in the 
 country's  economic  activities.  Others  held to the view that it was   necessary  to  abide  by  the  conventional  practice  of the 49 to 51  percent ratio for foreigners and Iranians.   However, from the end of 1995, the Iranian Council of Ministers took a  series of preceding - making decisions that allow for foreign partners to be majority shareholders in joint ventures, thereby making the issue of foreign investment ratio percentages fully transparent.