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Chapter
One
Definitions
Article 1
– All terms and expressions defined in Article (1) of the Foreign
Investment Promotion and Protection Act (FIPPA) shall have the same
meanings in these Regulations. Other terms and expressions used in these
Regulations shall have the following meanings:
Regulations: The implementing regulations of FIPPA
Investee Firm: A new and/or an existing Iranian company in which
the Foreign Capital is utilized under one of the methods specified in
FIPPA.
Non-governmental Sector: Private and cooperative sectors and
non-governmental public institutions and establishments.
Center: The Center for Foreign Investment Services, established in
accordance with Article (7) of FIPPA at the premises of the Organization.
Country’s Official Monetary Network: The banking system (the
Central Bank and the banking network, being governmental or
non-governmental) and non-banking credit institutions which, upon the
permission of the Central Bank, are dealing with monetary and foreign
exchange activities.
Audit Firm: An audit firm, selected by the Organization from
amongst the audit firms which are members of Iran Association of Certified
Accountants, subject matter of the “Law governing the Use of Specialized
and Professional Services of Competent Accountants asOfficial Accountant”
enacted in 1993 or the Auditing Organization.
Chapter
Two
Investment Methods and Criteria for Admission
Article 2-Foreign
Investments admitted in the territory of the Islamic Republic of Iran on
the basis of FIPPA shall enjoy the facilities and protections available
under FIPPA. Admission of such investments is subject to the general
conditions for admission of Foreign Capital and submission of a written
application by the Foreign Investor, and
with due observance of the criteria set forth in these Regulations.
Article 3
– Admission of Foreign
Investment, based on FIPPA and the criteria set forth in these
Regulations, may be carried out within the framework of the following
methods. The table of investment methods, features and facilities
available under FIPPA shall be prepared and published by the Ministry of
Economic Affairs and Finance.
a. Foreign Direct Investment(FDI)
b. Foreign Investment within the framework of contractual arrangements
including various types of “ Build-Operate Transfer”(BOT), Buy-Back and
“Civil Participation” schemes.
Article 4-Methods
of investment referred to in Article (3) of these Regulations, in respect
of the procedure for investment and the protection coverage of FIPPA and
these Regulations, have the following common or specific features and
advantages:
a. Common features and advantages:
1. Foreign Investors enjoy the same treatment as accorded to domestic
investors.
2. Import of Foreign Capital, being cash or non-cash (in kind), is only
subject to the Investment License and does not require any other license.
3. The volume of Foreign Investment in each individual case shall not be
subject to any limitation.
4. Foreign Capital is guaranteed against nationalization and
expropriation, and in such cases the Foreign Investor shall be entitled to
receive compensation.
5. Transfer of the principal capital, profit and capital gains derived
from utilization of capital shall be effected in the form of foreign
currency or, as the case may be, in the form of goods as set out in the
Investment License.
6. The freedom to export goods produced by the Investee Firm is guaranteed
and, in the event of any prohibition on the export, the goods produced may
be sold in the domestic market, and proceeds of sale shall be transferable
abroad in the form of foreign currency through the Country’s Official
Monetary Network.
b. Specific features and advantages:
1. Foreign Direct Investment (FDI):
1.1. Investment may be made in all areas where the private sector activity
is permitted.
1.2. There is no restriction on the percentage of foreign shareholding.
2. Investment within the framework contractual arrangements:
2.1.Compensation for losses sustained by the Foreign Investment resulting
from
prohibition and/or interruption in the execution of financial agreements
caused by enactment of law and/or Cabinet decrees, up to a maximum of
matured installments, shall be guaranteed by the Government.
2.2. In “B.O.T.” and “Civil Participation” schemes where a government
agency is the sole purchaser/or supplier of goods and services at
subsidized prices, the purchase of produced goods and services resulting
from an investment project by the government agency as a party to the
contract, shall be guaranteed in accordance with the relevant
regulations.
Article 5
– Iranian natural and
juridical persons applying for enjoying the facilities and protections
under FIPPA, are required to submit documentary evidences proving their
economic and commercial activities outside the country.
Article 6
– Foreign Investors who have
already invested in Iran without the benefit of coverage of FIPPA may,
upon completion of the admission procedure, benefit from FIPPA’s coverage
for the principal investment already made. Subsequent to the issuance of
the Investment License, the investor shall be entitled to benefit from all
privileges of FIPPA including, interalia, the right to transfer profit.
This type of investments shall be generally considered as existing
investments to which foreign Capital is applicable.
Article 7
– Foreign Investment in
existing firms by way of purchasing shares and/or capital increase and/or
a combination of the two, subject to completion of the admission
procedure, shall benefit from the of FIPPA provided that such investment
creates added value. The added value so created may result from an in
investment in the existing firm and/or achievement of certain objectives
such as enhancement of management, increase in exports, and/or improvement
in the technology level of the existing firm.
Article 8
– The Board, in the course
of examining and issuing the License for any
Investment application, shall investigate and verify ratios set out in
Para (d) of Article (2) of FIPPA in the following manner:
a. Specifications of the proposed project including the type and volume of
goods and services to be produced, the time-schedule for the
implementation and operation of the project, as well as projection for
domestic or export sales, will be set out application forms for
investment.
b. The official statistics provided by the competent authorities relating
to the value of goods and services supplied to the domestic market in
every sector and Investment License shall be obtained by the Deputy for
Economic Affairs of the Ministry of Economic Affairs and Finance. The
bases for the Board’s decisions shall be the statistics made available to
the Organization by the aforementioned deputy up to the end of the first
quarter of each year.
c. Sectors and sub-sector (field) shall be distinguished on the basis of
the list attached to these Regulations.
d. The volume of investment in each sector and sub-sector (field) shall by
the Board in accordance with the provisions of Paras (a), (b) and (c) of
this Article, and of goods and services supplied to the domestic market,
and with due observance of the exception from investment limitation on the
export of goods and services derived from Foreign Investment, and, in the
event of the project, the Investment License shall be issued.
Note – Changes in the ratio of the value of goods and services resulting
from Foreign Investment and/or changes in the value of goods or services
supplied to the domestic market, which at the time of issuance of the
Investment License have constituted the bases for the Board’s decision,
shall not affect the validity of the Investment License
once it is issued.
Article 9
– Assignment of the
proprietary rights to the Iranian party designated in “BOT” contracts may,
on the basis of the agreement of the parties to the contract, be effected
by way of gradual of proprietary rights during the contract single
assignment of the acquired rights at the end of the contract period.
Article 10
– In “B.O.T” contracts, the
proprietary rights of the Foreign Investor may be assigned to the
institution providing the financial facilities to the investment project
upon the confirmation of the Board.
Article 11
– With respect to those
investment projects where a government agency is the exclusive purchaser
of produced goods and services as well as cases where the goods and
services produced by project is supplied at subsidized prices, the
government agency may, within the established legal framework, guarantee
the purchase of the goods and services produced at the price and quantity
determined in the relevant contract.
Chapter
Three
Admission Regime
Article 12
– The Organization,
while carrying out the duties relating to admission and of Foreign
Investments within the framework of in charge of performing and conducting
foreign promotion activities inside and outside well as introducing legal
grounds and investment out studies and applied researches, organizing
conferences and seminars, cooperating with the relevant organizations and
institutions, and establishing and coordination with other agencies in
gathering, compiling and providing information related to Foreign
Investment.
Article 13
– The Board is responsible
for investigating and applications for admission, importation and
utilization of Foreign Capital as well as repatriation of capital and
accrued profits.
Article 14
– The permanent members of
the Board are the four deputy ministers specified FIPPA, and the Board’s
meetings require a quorum of at least three permanent members, and
decisions shall be made with at least three positive votes. The deputies
of other relevant ministries shall, upon invitation of the Chairman of the
Board, attend the meetings with the right to vote. In such cases,
decisions are made by the majority of votes cast.
Article 15
– Investors shall submit to
the Organization their written application together with the documents
specified in the relevant form. After conducting the necessary
investigation and taking the viewpoints of the ministry responsible for
the related sectors, the Organization shall bring the investment
application along with its
expert advice before the Board within a maximum period of 15 working days.
Enquires remained unanswered by the relevant ministry, after 10 days from
the date of receipt of the enquiry shall be considered as agreement of
that ministry with the investment concerned.
On the basis of the decisions adopted by the Board for which the
acceptance of the Foreign Investor has already been obtained, the
Investment License shall be drafted and, upon confirmation and by the
Minister of Economic Affairs and Finance, shall be issued.
Note: The Investment License shall include the particulars of the
investor(s), type and
method of investment, the manner for transfer of dividend and gained as
well as other
terms and conditions relating to the approval of every investment project.
Chapter
Four
The Center for Foreign Investment Services
Article 16
– For the purpose of
facilitating and accelerating the fulfillment of the Organization’s legal
duties in the areas of promotion, admission and protection of Foreign
Investment in the country, the” Center for Foreign Investment Services” be
established at the representatives of the relevant agencies will be
stationed. This Center shall be the focal point for all referrals by
Foreign Investment applicants to the relevant organizations.
Article 17
-The Ministry of Economic
Affairs and Finance (State Organization for Tax Affairs, Customs of the
Islamic Republic of Commerce, the Ministry of Labor and Social Affairs,
the Agriculture, the Central Bank of the Islamic Republic of Iran, the
General Directorate for of Companies and Industrial Property, the
Organization for Protection of the Environment, and other executive
agencies determined by the Minster of Economic Affairs and Finance shall
introduce their fully authorized representatives to the Organization with
the signature of the highest executive
authority of the agency.
The designated representatives, from the standpoint of the employment
regulations, shall be considered as the employees and in proportion to the
volume of Investment applications and enquiries by the investors, shall,
upon the Organization’s request, be present in the Center in order to
respond to the enquiries in accordance with the duties assigned to them
under this Article.
Article 18
-The representatives
introduced to act on be half of the relevant agencies shall have authority
over all executive and service issues related to their respective agencies
in respect of Foreign Investments. The relevant executive agency, for the
purpose of good performance of the duties assigned to the representative
under FIPPA
and these Regulations, is required to notify the duties, responsibilities
and authorities of the representative to other departments of its
organization and, simultaneously, to conduct a review on the
administrative procedures relating to Investments under its authority the
representative in the Center.
Article 19-
The relevant executive agency, in order to maintain the continuation of
its executive and service activities in the Center, may, in addition to
the designated representative, introduce another person with the same
qualifications to the representative of the agency. If necessary, the
relevant executive agency may place in
the Center a maximum of two more persons at senior level for issues
related to that agency.
Articles 20-The
functions of the “Center for Foreign Investment Services” are
determined as follows:
1-Provision of information and necessary advice, to Foreign Investors.
2-Coordination required in respect of affairs related to securing
necessary licenses, including, but not limited to, the declaration of
establishment, the license of the Organization for Protection of the
Environment, the permits for subscriptions relating to water, electricity,
fuel and telephone, exploration and exploitation licenses for
mines, etc. from the relevant agencies, prior to the issuance of the
Investment License.
3-Coordination required in respect of affairs related to the issuance of
visa, residence and work permits for individuals related to Foreign
Investment.
4-Coordination required in respect of affairs related to Foreign Invest
subsequent to the issuance of the Investment License including
registration of Joint Venture Company, registration of orders, and issues
related to importation and repatriation of capital, customs and tax
affairs, etc.
5-Coordination required to be established by representatives of the
agencies among executive departments of their respective agencies in
respect of applications for Foreign Investment.
6-Monitoring the good performance of decisions made in respect of Foreign
Investments.
Chapter
Five
Provisions for Importation, Valuation and
Registration of Foreign Capital
Article 21
– The procedure
relating to the importation, valuation and registration of Capital, being
cash or non-cash (in kind), is set forth as follows:
a. Capital in cash
1. Cash funds in foreign exchange referred to in Para (a) of Article
(11) of FIPPA imported into the country in one or several stages with the
to be converted into Rials, shall, on the date of conversion into Rials
and in accordance with the certificate of the bank, be registered by the
Organization in the Investor, and shall be covered by FIPPA. The Rial
equivalent of the foreign currency imported shall be deposited in the
account of the Investee Firm or in the account of the investment project.
2. Cash funds in foreign exchange referred to in Para (b) of Article (11)
of FIPPA imported into the country in one or several stages but not
converted into Rials, shall be deposited in Foreign exchange account of
the investee Firm or in the account of the investment project. These
funds, as from the date of deposit, shall be registered in the name of
Foreign Investor, and shall be covered by FIPPA. The said funds may, under
the supervision and
confirmation of the Organization, be used for foreign purchases and orders
related Foreign Investment.
Note: The Country’s Official Network is required, in relation to
the foreign transfer-drafts of Foreign Investors, to certify directly to
the Organization the details of the draft including the name of the
transferor, the amount of the foreign exchange, the type of the foreign
exchange, the date of receipt, the date the name of the Investee Firm,
and, in case of conversion into Rials, the Rial equivalent of
the foreign exchange imported.
b. Capital in kind (non-cash)
Foreign Capital in-kind includes those items mentioned in Paras (b),
(c) and (d) under the definition of the term Foreign Capital in Article
(1) of FIPPA for procedure for importation, valuation and registration is
set out as follows:
1. With respect to the Foreign Capital in kind referred to in Paras (b)
and (c) above (including machinery, equipment, tools and spares, CKD
parts, raw, addable and auxiliary materials), the Ministry of Commerce,
after being notified of the Organization’s agreement with the importation
of the non-cash Foreign Capital items, shall proceed with the statistical
registration and shall communicate the issue to the relevant office for
the purpose of valuation and release of the imported items.
The Customs’ valuation on the value of the imported items shall be
considered as the acceptable valuation, and, upon the request of the
investor, the value stated in the import license plus the transportation
and insurance expenses, shall be registered in the name of the Foreign
Investor, and shall be covered by FIPPA as from the date of release from
the Customs. In case of discrepancy between the Customs valuation and the
price stated in the detailed list (of the non-cash items) approved by the
Board, the Customs’ valuation shall be the basis for registration of the
Foreign Capital in the Organization and the General Directorate for
Registration of Companies and Industrial Property.
Note 1-The Ministry of Commerce and organization required to take
measures, within a period of one month from the date of official
notification of these Regulations, for the form for the statistical
registration of orders of the non-cash Foreign Capital items under this
paragraph, and to act accordingly.
Note 2 – The Customs of the Islamic Republic of Iran is required to assess
the value of the second-hand machinery and equipments related to
Investments at secondhand price.
Note 3 – If, by finding, the non-cash Foreign Capital imported into the
country is defective, mutilated, not usable and/or does not conform with
the specifications declared in the list approved by the Board, the matter
will be brought before the Board, and that part of the value of the
imported goods which is not confirmed by
the Board shall be deducted from the account of the imported capital.
2- With respect to capital items referred to in Para (d) of Article (1) of
FIPPA (including patent, know-how, trade names and marks, and services),
the Organization, after carrying out the necessary investigations, shall
submit to the Board a report on the fulfillment of the contractual
undertakings the technology and service agreements, and the approved sums
shall be registered by the Board as Foreign Capital and shall be covered
by FIPPA within framework of directive to be drafted by the Board and
approved by the Minister of Economic Affairs and
Finance.
Chapter
Six
Provisions on Repatriation of Capital
and Capital Gains
Article 22
– All applications
for the transfer of capital, profit as well as gains resulting in the
value of capital covered by FIPPA must be supported by the report of an
Audit Firm that is a member of the Iran Association of Certified
Accountants. Such transfers shall be affected, after deduction of all
legal dues, up to the amount certified by the Audit Firm.
Article 23
– Transfer of the principal capital, profit and gains resulting from an
increase in the value of capital related to investments referred to in
para (a) of Article (3) of FIPPA, is permissible in the form of foreign
exchange and/or, upon the request of the Foreign Investor, by way of
export of authorized goods.
Repatriation of capital and profits related to investments referred to in
para (b) of Article (3) of FIPPA is permissible out of the exchange
earnings from the export of the products and/or out of the foreign
exchange earnings from the services rendered by the Investee Firm, and/or
by way of the export of other authorized goods. The Board, on the basis of
the report of the Audit Firm on the latest status of the principal
capital, amount of profit and capital gains belonging to the foreign
Investor, shall determine the transferable amount and shall issue, upon
the confirmation by the Minister of Economic Affairs and Finance ,the
repatriation permit, on a case by case basis.
Note-With respect to investments referred to in Para (b) of Article (3) of
FIPPA, if, as of any export constraint, the provision of foreign for
transfer of funds in the opinion of the Board is found expedient and
possible, the required foreign exchange shall be made available through
the banking system.
Article 24
– In the event the
Investment License refers to Paras(b) and/or (c) of Article (17) of FIPPA,
the said license shall be considered as the export and the Investee Firm
may deposit its export earnings in an escrow account in a local and/or
foreign bank and directly withdraw therefrom for the purposes specified in
the License and pay to the Foreign Investor. Any amount of foreign
exchange acquired in excess of the withdraw able amounts shall be subject
to the country’s foreign exchange regulations. In any event, the Investee
Firm, after payment of
the relevant amounts, is required, along with submission of the export
certificate, to notify the Organization in writing.
Article 25
–The foreign exchange earnings from the exports of Foreign Investment,
within the limits prescribed by the Board, is exports and from foreign
exchange regulations such as commitments for reintroducing the export
earnings to the country pursuant to the current and future governmental
regulations.
Article 26
– In the event of a legal
restriction, and/or restriction prescribed by the Investee Firms cannot
export their products, so long as the legal restriction and/or Government
decision preventing export is in force, the said Investee Firms are
authorized to sell their products in the domestic market, and, by
providing the Rial equivalent of the foreign exchange requirements
specified in the Investment license, to purchase the required foreign
exchange from the banking system and transfer the same, and/or (should
they wish so) export authorized goods.
Article 27-The
transferable funds as set forth in FIPPA may be purchased, after
confirmation of the Board and upon confirmation by the Minister of
Economic Affairs and Finance, by the Foreign Investor from the banking
system, and be effectively transferred, and the Central Bank of the
Islamic Republic of Iran shall, for this purpose, make available the
necessary foreign exchange to the banking system.
Article 28
– In the event that the Foreign Investor does not transfer abroad the
transferable funds within a period of 6 months from the date of completion
of the relevant administrative formalities, the said funds shall be
removed from the coverage of FIPPA. The continuance of the applicability
of FIPPA in respect of the said funds shall be possible upon approval of
the Board.
Article 29
– The Foreign Investor, if
so wishes, may use, with the permission of the Board , all or part of the
transferable amounts pursuant to Articles (13) , (14) and (15) of FIPPA
for capital increase in the same firm, and/or, after completion of the
legal formalities for obtaining the Investment License, may utilize it in
a new investment.
Article 30
– The Government, with due
observance of Article (138) of the Constitution of the Islamic Republic of
Iran, (hereby) delegates to the member Ministers of the High Council for
Investment the authority to determine the
scope of acceptable commitments under Note (2) of Article (17) of FIPPA.
The Board is authorized to determine the extent of losses resulting from
prohibition and/or interruption in the execution of the relevant
agreements up to the ceiling of the matured commitments within the limits
of acceptable undertakings set out in the Investment License. The bases
for making decisions in respect of the authority referred to in this
Article the agreement of the majority members of the said Council.
Decisions adopted may be issued, if confirmed by the President, pursuant
to Article
(19) of the internal regulations of the Council of Ministers.
Article 31-In
case the Foreign Investor insures his investment in Iran and in accordance
with the terms of the insurance policy, on account of a payment made under
the insurance policy to the investor for the compensation of a loss
incurred from non-commercial risks, the insurance institution subrogates
the investor, the subrogee is entitled to enjoy the same rights on account
of which for losses has been made. This subrogation shall not be
considered as assignment of capital, unless the provisions of Articles (4)
and/or (10) have been complied, accordingly.
Chapter Seven
General Provisions
Article 32-The
Foreign Investor is required, as from the date of notification of the
Investment License within a period determined on the basis of the
peculiarities of the investment project by theBoard, import part of his
capital into the country as a sign of his firm intention for the
implementation of the project. In event the investor does not
import part of the capital into the country within the duration of the
determined period, and/or does not apply for the extension of the period
by way of submission of justifiable reasons, the Investment License shall
be considered as null and void.
Article 33-The
Foreign Investor is required to inform the Board of any change in the
name, legal status, nationality, and of any change of more than 30% in his
ownership.
Article 34-In
cases where the Foreign Investment results in the establishment of an
Iranian company, the ownership of land in the name of the company is
permitted at a size appropriate to the investment project, at the
discretion of the Organization.
Article 35
– The relevant executive
agencies, including but not limited to, the Ministry of Foreign Affairs,
the Ministry of Interior, the Ministry of Labor and Social Affairs, and
the Disciplinary Forces (the Police) are required, at the request of the
Organization, to proceed with the issuance of visas, residence permits and
work permits for foreign investors, directors, experts and their immediate
family members in relation to the investments covered by FIPPA. The
Ministry of Foreign Affairs is required, in to the entry visas, to act, as
the case may be, in the following manner:
a. The Ministry of Foreign Affairs, upon confirmation by the Organization,
shall communicate to the missions of the Islamic Republic of Iran outside
the country the authorization for the issuance of three-year multi-entry
visa for
each individual with a right of entry, and a three-month residence permit
on each occasion.
b. The introduced persons may, after entry into the country, by referring
to the Passport and Visa Department of the Ministry of Foreign Affairs and
by submission of the Organization’s formal note, extend their residence
permits
for a period of one year. Extension of residence affected is by way of a
seal indicating “multiple visas with one year validity” so that the
individual would not be required to obtain entry and exit visas.
Article 36
– The responsibility of the
Organization in relation to the general publication of information
pursuant to Article (21) of FIPPA is limited to the information that is
publishable under business practice. The Board is vested with the
authority to determine whether information is publishable.
Article 37
– The Organization and the
Board are permitted, for the purpose of carrying out the functions and
duties contemplated in FIPPA and these Regulations, to use, whenever
required, consultancy and professional specialized
services of the Audit Firms member of Iran Association of Certified
Accountants and other private or cooperative qualified firms.
Article 38
– All provisions contained
in the decrees of the Council Ministers in respect of Foreign Investment
that are contrary to the provisions of these regulations, shall be
repealed from the date of coming into force of these
Regulations. |
