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Chapter
One :Definitions
Article 1:
The terms and expressions used in FIPPA shall have the
following meanings:
FIPPA : The Foreign Investment Promotion and Protection Act.
Foreign Investor : Non-Iranian natural and/or juridical persons or
Iranians using capital with foreign origin who have obtained the
Investment License referred to in Article (6).
Foreign Capital: Various types of capital, whether in cash and/or
non-cash (in kind), imported In to the country by the Foreign Investor,
and comprising the following:
a) Cash funds in the form of convertible currency, imported in to the
country through the banking system or other methods of 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, trade marks and names, and
specialized services;
e) Transferable dividends of foreign investors ;
f) Other permissible items approved by the Council of Ministers .
Foreign Investment: Utilization of Foreign Capital in a new or existing
enterprise after
obtaining the Investment License .
Investment License: The license issued for each Foreign Investment in
accordance with
Article 6 of FIPPA .
Organization: The Organization for Investment, Economic and Technical
assistance of
Iran, referred to in Article (5) of the law establishing the Ministry of
Economic Affairs and
Finance, enacted on July 15, 1974.
Board: The Foreign Investment Board, referred to in Article (6) of
FIPPA.
Chapter Two
General Conditions for Admission of Foreign Capital
Admission of Foreign Investment shall be made, in accordance with the
FIPPA and with due observance of other prevailing laws and
regulations of the country, for
the purpose of development and promotion of producing activities in
industry, mining,
agriculture and services, and based on the following criteria:
a) Bring about economic growth, upgrade technology, and enhance the
quality of products,
increase employment opportunities and exports;
b) 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;
c) Does not entail the grant of Foreign Investors. Concession means
special rights which place
Foreign Investors in a monopolistic position;
d) The ratio of the value of the goods and services produced by the
Foreign Investments,
contemplated in FIPPA, to the value of 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 sub-sector (field). The sub-sectors and
scope of investment in
each sub-sector shall be determined in the Implementing Regulation to be
approved by the
Council of Ministers. Foreign Investment for the production of goods and
services for export
purposes, other than crude oil, shall exempt from the aforementioned
ratios.
Note : The “Law for the Ownership of Immovable Property by Foreign
Nationals” enacted
on June 6 1921 shall remain in effect. Ownership of land of any type and
any extent in the
name of Foreign Investors is not permitted within the frame work of
FIPPA.
Article 3
Foreign Investments admitted in accordance with the provisions of FIPPA
shall enjoy the
facilities and protections available under this FIPPA. Such
investments may be admitted
under the following two categories:
a) Foreign direct investment (FDI) in areas where the activity of the
private sector is
permitted;
b) Foreign Investments in all sectors within the framework of “Civil 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: So long as the investment BOT schemes referred to in Para (b)
exercise of ownership
right by the foreign remaining recipient economic enterprise permitted.
Article 4
Investment by a foreign government or foreign governments in the Islamic
Republic of Iran
shall be the Consultative Assembly, on a case by case basis. Investments
by foreign
government companies are deemed private.
Chapter Three
Competent Authorities
Article 5
The Organization is the sole official authority for the promotion of
Foreign Investments 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,
utilization and
repatriation of submitted to the Organization.
Article 6
For the purpose of investigation and making decision on applications
referred to in Article
(5), a board under the name of the “Foreign Investment Board” shall be
established 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 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 shall,
after the approval of
the Board, be issued upon confirmation and signature by the Minister of
Economic Affairs
and Finance.
At the time of admission of Investments, the Board is required to observe
the criteria referred
to in Article (2) of FIPPA.
Note: The Organization, after preliminary review, shall submit the
investment applications,
along with its own recommendation, to the Board within a maximum period of
15 days as
from the date of the applications. The Board must review the applications
within maximum a
period of one month from the date of submission, and notify its final
decision in writing.
Article 7
In order to facilitate and expedite issues related to the admission and
Investments in the country, all relevant agencies including the Ministry
of Economic Affairs
and Finance, the Ministry of , the Ministry of Commerce, the Ministry of
Labor and Social
Affairs, the Central Bank of the Republic of Iran, the Customs of the
Islamic Republic of Iran,
the General Directorate for Registration of Companies and Industrial
Property, and the
Organization for Protection of the Environment are required designate a
fully authorized
representative to the Organization by the highest authority of the agency.
These
representatives shall act as the liaison and coordinator for all issues
related to their respective
agency vis-à-vis the organization.
Chapter Four
Guarantee and Transfer of Foreign Capital
Article 8
Foreign investments, Under FIPPA shall equally enjoy all rights,
protections, and facilities
available to local investments
Article 9
Foreign Investments shall 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.
Note 1 :
Application for compensation shall be submitted to the Board within one
year from the date
of expropriation or nationalization.
Note 2 :
Disputes arising from expropriation or nationalization shall be settled in
accordance with the
provisions of Article (19) of FIPPA .
Article 10
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 permitted. In case of assignment to another
Foreign Investor the
assignee who shall have, at least, the same qualifications as the initial
investor, shall replace
and/or become a partner to the former investor from the standpoint of
FIPPA .
Chapter Five
Provisions for Admission, Importation and Repatriation of Foreign
Capital
Article 11
Foreign Capital may be imported into the country by way of one or a
combination of the
following manners, to be covered under this Act :
a) Cash funds to be converted into Rials ;
b) Cash funds not to be converted into Rials but to be used directly for
the purchases and
orders related to Foreign Investment;
c) Non-cash items, after valuation by the competent authorities.
Note:
The procedure related to the manner of valuation, and registration of
Foreign Capital shall be
determined in the Implementing of FIPPA.
Article 12
The rate of conversion of foreign exchange applicable at the time of
importation or
repatriation of Foreign Capital as well as the exchange foreign exchange
transfers, in case of
applicability of a unified exchange rate, shall be the same rate
prevailing in the country’s
official network; otherwise, the applicable exchange rate shall be the
free market rate as
acknowledged by the Central Bank of the Islamic Republic of Iran.
Article 13
The principal of the Foreign Capital and profits therefrom, or the balance
of capital remaining
in the country, after fulfillment of all obligations and payment of legal
dues, and upon
approval of the Board and confirmation by the Minister of Economic Affair
and Finance,
shall be transferable abroad subject to a three-month prior notice
submitted to the Board.
Article 14
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, shall be transferable abroad
Article 15
Payments related to the installments of the principal of the financial
facilities of Foreign
Investors and their associated expenses, agreements for know-how,
technical and engineering
assistance, trade marks and 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.
Article 16
Transfers referred to in Articles (13), (14) and (15), shall be made in
compliance with the
provisions of Para (b) of Article (3) of FIPPA.
Article 17
The foreign exchange required for the transfers referred to in Article
(14),(15) and (16) of
FIPPA may be procured in the following manners :
a) Purchase of foreign currency from the banking system ;
b) Out of the foreign exchange earned from the export of the products
and/or the foreign
exchange earned from the service activities of the economic enterprise in
which the Foreign
Capital is employed ;
c) Export of permissible goods specified in the list approved by Council
of Ministers for
implementation of this paragraph in compliance with the relevant laws and
regulations .
Note 1:
Application of one or a combination of the above manners shall be
specified in the
Investment License .
Note 2:
With respect to investments referred to in Para (b) of this Article, if,
as a result of enactment
of legislation or Cabinet decrees, the execution of the financial approved
within the framework of FIPPA is prohibited or interrupted, the
resulting losses, up to a maximum of
installments at maturity, shall be provided and paid by the Government.
The scope of
acceptable commitments within the framework of FIPPA shall be
approved by the Council
of Ministers.
Note 3:
The Central Bank of the Islamic Republic of Iran must secure and make
available to the
Foreign Investor the equivalent foreign currency for the transferable
amounts referred to in
Para (a), upon the agreement of the Organization and confirmation by the
Minister of
Economic Affairs and Finance .
Note 4:
In case the Investment License expressly refers to Para (b) and/or (c)of
this Article, this
License shall be deemed as the export license .
Article 18
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 .
Chapter Six
Settlement of Disputes
Article 19
Disputes arising between the Government and the Foreign Investors with
regard to their
respective mutual obligations within the context of investments under
FIPPA, if not settled
through negotiations, shall be referred to domestic courts, unless the Law
ratifying Bilateral
Investment with the respective Government of the Foreign Investor provides
for another
method for settlement of disputes .
Chapter Seven
Final Provisions
Article 20
The relevant executive agencies are required to take measures, upon the
request of the
Organization, for the issuance of entry visa, residence permit ,work and
employment permit,
as the case may be, for Foreign Investors ,managers and experts of the
private sector linked
to Foreign Investments under FIPPA, as well as their immediate
relatives .
Note: Differences of opinion between the Organization and executive
agencies shall be
settled upon the opinion of the Minister of Economic Affairs and Finance .
Article 21
The Organization is required to ensure the access of the general public to
all information
related to investment, foreign investors, investment opportunities,
Iranian partners, fields of
activity and other information available to the Organization .
Article 22
All ministries, government companies and organizations as well as public
institutions to
whom the applicability of law is required to be stipulated by name, are
under obligation to
provide the Organization with reports on foreign investments implemented
as well as
information required for foreign investors so that the Organization can
proceed in accordance
with the preceding Article .
Article 23
The Minister of Economic Affairs and Finance is required to provide ,every
six months, the
relevant commissions of the Islamic Consultative Assembly with a report
reflecting the
performance of the Organization with respect to Foreign Investments under
FIPPA.
Article 24
As from the date of the enactment of FIPPA and its Implementing
Regulations, the Law for
the attraction and Protection of Foreign Investments – enacted on November
28, 1955 – as
well as its Implementing Regulations, are repealed. Foreign capital
previously admitted
under the said
Law shall be covered by FIPPA. The provisions of or altered by
subsequent laws and
regulations provided that the repeal or is expressly stipulated in such
laws and regulations .
Article 25
The Implementing Regulations of FIPPA shall be prepared by the
Ministry of Economic
Affairs and Finance and subsequently approved by the Council of Ministers
within two
months .
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The above Act comprising of 25 Articles and 11 Notes is enacted by the
Islamic Consultative
Assembly in its session of Sunday, 10 March2002. The initial part of
Articles (1) and (2),
Para (c) and (d) of Article (2), Para (b) of Article (3), and Note (2) of
Article (17) has been
approved by the Expediency Council in its meeting on Saturday, May 25,
2002. |
