– Chapter One
The terms and expressions used in the present Act shall have the meanings specified below:
- Act: Foreign Investment Protection and Promotion Act Foreign
- Investor: Any natural or legal non Iranian or
Iranian person utilizing capital of foreign origin having obtained the
Investment License referred to in Article 6.
- Foreign Capital: All types of capital, including
cash or non cash that has been imported into the country by the Foreign
Investor and includes the following:
- Sums in cash entering the country in the form of convertible
currency though the banking system or other means of transfer approved
by the Central Bank of the Islamic Republic of Iran
- Equipment and machinery
- Spare parts and tools, raw material, manufacturing parts, additives and auxiliary material
- Patent rights, technical know-how, trade names, trademarks and specialized services
- Transferable dividends belonging to the Foreign Investor
- Other authorized cases with the approval of the Council of Ministers.
- Foreign Investment: The utilization of Foreign Capital in an existing or newly established economic firm upon obtaining an Investment License.
- Investment License: A license to be issued in conformity with Article 6 of this Act for each case of Foreign Investment.
- Organization: The Organization for Investment,
Economic and Technical Assistance of Iran (OIETA) subject of Article 5
of the Law on Establishment of Ministry of Economic Affairs and Finance
- Board: Foreign Investment Board subject of Article 6 of this Act.
FIPPA IRAN – Chapter Two
General Criteria for Admission of Foreign Capital
Admission of Foreign Investment under
this Act and in compliance with other current laws and regulations of
the county must be for development and productive activities in the
fields of industries, mines, agriculture and services shall be based on
the following criteria:
- Shall lead to economic growth, promote
technology, promote quality of productions, increase employment
opportunities and increase exports
- Does not jeopardize national security
and public interest, harm the environment, disrupt the national economy,
or disturb productions dependent on domestic investments
- Shall not involve the granting of
concession by the government to Foreign Investors; concession means
distinctive rights that place foreign investors in an exclusive and
- The proportion of the value of goods
and services produced by Foreign Investment under this Act in comparison
with the value of goods and services supplied in the domestic market at
the time of issuance of Investment License, in each economic sector,
shall not exceed 25% and in each economic sub-sector shall not exceed
35%. The determination of sub-sectors and amount of investment in each
will be pursuant to regulations ratified by the Council of Ministers.
Foreign Investment for production of goods and services for exports except for crude oil shall be exempt from such proportions.
Note: The Law
Pertaining to Ownership of Immovable Property by Foreign National
approved on June 6, 1931 remains applicable. The ownership of any type
of land in any amount in the name of the Foreign Investors is not
permitted within the framework of this Act.
Foreign investments admitted in
compliance with the provisions of this Act shall enjoy and facilities
and protections of this Act. These investments may be admitted by the
1. Direct foreign investment in those fields that private sector activity is authorized
2. Foreign investments in all sectors within the frameworks of “civil
partnership”, “buy back”, and “build, operate and transfer (BOT)” where
the return of principal and profit arises solely through the economic
activity of the same investment project and does not rely on any
guarantee by the government or banks or government companies.
Foreign Investment or the interest thereof invested through the “build,
operate and transfer” scheme according to clause (b) of the present
Article is not fully amortized, imposition of ownership rights by the
Foreign Investor onto the investment project firm in proportion with
retained share capital shall be permissible.
Investment in the Islamic Republic of
Iran by foreign government(s) shall be approved by the Islamic
Consultative Assembly on a case by case basis. Investments by foreign
government companies shall be treated as private investment.
FIPPA IRAN – Chapter Three
Decision Making Bodies
The Organization is the only official
body in the country for encouragement of foreign investments and
pursuing all the relevant affairs of foreign investment and all requests
by foreign investors pertaining to the relevant matters such as
admission, entry, utilization, and export of capital shall be submitted
to the Organization.
In order to review and decide upon the
requests subject of Article 5, a board referred to as the “Foreign
Investment Board” shall be set up to be presided over by the Deputy
Minister of Economic Affairs and Finance as the head of the Organization
and shall consist of Deputy of Minister of Foreign Affairs,
Vice-Chairman of the State Management and Planning Organization,
Vice-Chairman of the Central Bank of Iran, as well as the deputies of
other ministries concerned, as the case may be.
Concerning the request of admission, the
Investment Licenses shall be issued upon approval of the Board and
confirmation and signature of the Minister of Economic Affairs and
When accepting Foreign Investment, the Board shall be obliged to observe the criteria set forth in Article 2 of this Act.
Note: Within a
maximum of 15 days from the date of application, the Organization shall
complete preliminary examination and recommend its decision to the
Board. The Board must within one month of receiving the application,
examine and announce in writing its final decision in regards to the
As a matter of facilitation and
acceleration of matters of acceptance and activity of foreign
investments in the country, all relevant organizations 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 the Islamic Republic of Iran, Islamic
Republic of Iran Customs, Office for Company Registration and Industrial
Ownership and the Environment Protection Organization, are required to
introduce a fully authorized representative, certified by the highest
official of the entity, to the Organization. The nominated
representatives will be recognized act as intermediaries and
coordinators of all relevant affairs of that entity and the
FIPPA IRAN – Chapter Four
Guarantee and Transfer of Foreign Capital
Foreign investments subject to this Act
shall enjoy the same rights, protections and facilities available to
domestic investments in a non-discriminatory manner.
Foreign Investment shall not be
expropriated or nationalized unless for the public interest, through a
legal process, in a non discriminatory manner, and against payment of
appropriate compensation based on the real value of that investment
immediately before the expropriation.
Note 1: Requests for
compensation must be submitted to the Board within a maximum of one year
following the expropriation or nationalization.
Note 2: Disputes resulting from expropriation or nationalization will be settled according to Article 19 of the present Act.
Transfer of all or part of the Foreign
Capital to a domestic investor or upon the approval of the Board and
confirmation of Minister of Economic Affairs and Finance, to another
Foreign Investor shall be permissible. In case of transfer to another
Foreign Investor, the transferee, who shall have at least the
qualifications of the original investor, will replace and/or become
partners with the original investor for the purposes of the regulations
of the present Act.
FIPPA IRAN – Chapter Five
Regulations Pertaining to Admission, Import and Export of Foreign Capital
Foreign Capital may enter the country and be covered under this Act through one or a combination of the following:
- Cash sums converted to Rials
- Cash sums not converted to Rials to be used directly for purchases and orders related to the Foreign Investment
- Non-cash items upon completion of the evaluation process by the competent authorities
Note: The executive
by-laws of the present Act shall specify the relevant procedure for
evaluation and registration of Foreign Capital.
The applicable foreign exchange rate at
the time of entry or exit of Foreign Capital as well as all foreign
exchange transfers shall in the case of applicability of a unified
exchange rate be that rate prevailing in the country’s official network
and otherwise the daily free market rate as recognized by the Central
Bank of Iran.
The principal and interest of Foreign
Capital or any portion of the capital remaining in the country may be
transferred abroad with a three-month notice to the Board upon
fulfillment of all outstanding obligations, payment of legal deductions
and the approval of the Board and confirmation of Minister of Economic
Affairs and Finance.
The profits of Foreign Investment may be
transferred abroad upon deduction of taxes, duties and legal reserves
with the approval of the Board and confirmation of the Minister of
Economy and Finance.
Payments for the principal part of
financial facilities and related expenses of Foreign Investors,
contracts related to patent-right, know-how, technical and engineering,
trade name and trademark, management and other similar contracts within
the framework of Foreign Investment may be transferred abroad pursuant
approval of the Board and confirmation of the Minister of Economic
Affairs and Finance.
Transfers subject of Articles 13, 14 and 15 shall be done in compliance with provisions of clause (b) of Article 3.
Acquisition of foreign exchange for transfers subject of Articles 13, 14 and 15 is possible through the following methods:
- Purchase of foreign exchange from the banking system
- Using the foreign currency earned
through the export of commodities produced, and/or the foreign currency
earned through providing services of the economic firm in which the
Foreign Capital is utilized
- Export of authorized goods as per a
list to be approved for implementation of this clause, by the Council of
Ministers with due regard to relevant laws and regulations.
Note 1: Application of one or a combination of the above methods shall be provided for in the Investment License.
Note 2: In the case of investments subject of clause
(b) of Article 3 of this Act, should laws or government regulations lead
to prohibition or cessation of approved financial agreements within the
framework of this Act, then the government shall procure and pay the
resulting damages with the ceiling being the matured and due
installments. Limits of the reimbursable undertakings according to this
Act shall be approved by Council of Ministers.
Note 3: The Central Bank of the Islamic Republic of
Iran is obligated to procure and provide the foreign currency equivalent
of transferable sums mentioned in Clause (a) above to the Foreign
Investor with the approval of the Organization and confirmation of the
Minister of Economic Affairs and Finance.
Note 4: If the Investment License is based on clauses
(b) and (c) of this Article, the said license shall be regarded as an
The repatriation of the part of Foreign
Capital which is imported into the country within the framework of the
Investment License but remains unused, shall not be subject to any
foreign exchange or imports-exports’ laws and regulations.
FIPPA IRAN – Chapter Six
Settlement of Disputes
Any disputes between the government and
foreign investors related to the investments subject of this Act which
can not be settled through negotiations, shall be examined by domestic
courts of law, unless another mode of settlement of disputes has been
agreed upon within a law on bilateral investment agreement with the
government of the Foreign Investor.
FIPPA IRAN – Chapter Seven
The relevant executive bodies are
required to accommodate the requests of the Organization in matters
concerning issuance of visas, residence permits, issuance of work and
employment permits on a case by case basis which shall be required for
foreign investors, managers and/or experts working of the private sector
and connected to foreign investments subject to this Act and for their
next of kin.
Note: Disputes between
the Organization and executive bodies will be settled according to the
decision of the Minister of Economic Affairs and Finance.
The Organization is required to
facilitate public accessibility to all information pertaining to
investment and foreign investors, investment opportunities, Iranian
partners for the related activity and other information available to the
All ministries and government companies
and organizations as well as those public institutes that the
applicability of law to them requires specific mention are required to
provide the Organization with all information needed for foreign
investment and reports on foreign investments made, so that the
Organization could act upon according to the above Article.
The Minister of Economic Affairs and
Finance is required to provide the relevant Islamic Consultative
Assembly commissions with a report on the performance of the
Organization with respect to Foreign Investment subject of this Act
every six months.
As of the date of approval of this Act
and its executive by-laws, the former Law on Attraction and Protection
of Foreign Investment — approved on October 29, 1955 — and the relevant
by-laws are repealed. All foreign capital subject to the former law will
be covered by this Act. The provisions of this Act will be repealed or
modified by any subsequent and upcoming laws and statutes only if a
specific provision shall be stipulated in them reiterating such
nullification or modification.
The executive by-laws of the present Act
shall be prepared by the Ministry of Economic Affairs and Finance and
subsequently approved by the Council of Ministers within 2 months.
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