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www.howtoinvestiniran.com
§ Awelldiversifiedeconomy
§ Astableregioninaregionofinstability
§ Alonghistoryofeconomicgrowth
§ Developmentofinternationalrelations
§ FIPPA
Iran
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GDP
• IranisthesecondlargesteconomyintheMiddleeastandMENAregion• EstimatedgrossdomesticproductofUSD425bn in2014
219258
337
397 398
467
592 587
511
425
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDPUSDBillionDollar
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6.299,0
7.874,0 7.710,0
6.631,0
5.442,0
2010 2011 2012 2013 2014
IranGDPpercapita($)
GDPperCapita
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§ MainImportitems:Rice,soybeanoil,livestockcorn,vehicleparts,andwheat
§ Mainexportitems:Hematiteironore,liquidpropane,oiltar,liquidgas,petrochemicalproductsandotherindustrial,agricultural,mineralproductsaswellasrugs,handicraft,fruitsandnuts
ImportandExport
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2015 2016 2017 2018 2019
GDP-CurrentPrices(USDbn) 417 432 450 470 491
GDP-PerCapita(USD) 5,283 5,401 5,556 5,727 5,906
GDPbasedonpurchasing-power-paritypercapita(USD)
16,918 17,396 17,922 18,467 19,022
GrossNationalSavings(PercentofGDP)
%43 %41 %40 %39 %37
IMFForcasts
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354.000
460.000
594.000
782.000 816.000
2011 2012 2013 2014 2015
Liquidity(billionRials)
• TradableBonds:100,000BillionRials(USD3.3bn)
• Effectiverate(compoundrate):20%
MoneyMarket
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Comparisonofinflation,annualinterestrateandbond(Sukuk)rateinrecentyears
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
2007 2008 2009 2010 2011 2012 2013 2014 2015
BondRate
InterestRate
Inflation
Inflation,InterestRateandBondRate
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3,14
1,652,01 1,91
3,05
3,654,15
4,87
3,04
1,9 2,1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
IranForeignDirectInvestment(USDBillionDollar)
ForeignDirectInvestment
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• Localbankaccountisneeded.
• Documentsrequired toopenabankaccountforlegalpersons:a. Representative ofthecompanytotravel toIranb. Articleofassociation&prospectusofthecompany(inEnglish)c. authorizedsignaturesofthecompanyd. AttestationofIran`sembassyincountrywherecompanyishosted
Howtobegin
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OIETAI
• Founded in June 1975
• The main official authority to promoteand protection of Foreign Investment
• Investigation of all issues related toforeign investment such as:
o Admissiono Importationo Utilizationo Repatriation
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Foreign Investment Services Center (FISC)
Facilitate Admission Procedure and relevant activities of FDI
Facilitate Official procedures for required permissions and licenses
Coordination for entry visa, residence and employment permits
Coordination with Executive Agencies Related to ForeignInvestment
Coordination in registration of JV company, import machinery andequipment, repatriation of capital, customs and tax affairs ,etc.
services are not limited to prior-investment stages; foreign investors may, atany time and any stage ever after, refer to FISC and benefit from its services.
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FISC Members from Relevant Executing Agencies
FISC
I.R.I CustomsAdministration
Ministry ofForeign Affaires
Ministry ofLabor
Ministry ofagriculture
TaxOrganization
Ministry ofIndustry, Mine
&Trade
Any Organizationas per the case
Central Bankof Iran
Office for registration
Companies & IndustrialProperty
Department ofEnvironment
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Ø Thelawprotectingforeign investmentinIranistheForeignInvestmentPromotionandProtectionActratifiedin2002whichishereinafterreferred toasFIPPA.
Ø TheOrganizationforInvestmentEconomicandTechnicalAssistanceofIran(OIETAI) isthesolegovernmentauthoritywhichinaccordancewithFIPPAislegallyempowered toadmitandextend legalprotectionstoforeigncapital.
Ø Allforeigninvestorsarepermittedtoinvest, forthepurposeofdevelopmentandproducingactivities,inallareasofindustry,mining,agricultureandservices.
WhatisFIPPA
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• There isnorestriction forforeigninvestment inlistedcompaniesinTehranStockMarket
• FundamentalRightsRecognizedunderFIPPA- Transferring Profits,CapitalandGainsonCapital- ReceiveCompensation fromExpropriationandNationalizationofForeign
Capital- ReceiveCompensationResultingfromthePassingofLawsorCabinet
DecreesCausingProhibition- EnjoyEquitableTreatmentAccordedtoDomesticInvestors
• AllSectorsareopentoforeigninvestment
BenefitsofFIPPA
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FIPPA: Types of Investments
v Direct InvestmentEquity Participation:in All Areas Open to Iranian Private Sector
v Investment through Contractual ArrangementsNon-Equity Forms:o Buy Back Arrangementso Civil Partnership o BOT Schemes
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Risks Covered By FIPPA
AllN
on-Com
mercia
lRisks
Money Transfer
Nationalization & Expropriation
Government Intervention andBreach of Contracts byGovernment
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Some Other Features of FIPPA
• No Limit on
• Other Services
EquityPercentage
VolumeofInvestments
ImportofForeignCapital,beingcashornon-cash(anykind)
CapitalRepatriation
TypesofCapitalImported
3yearsMulti-entryVisa
3yearsResidencePermit
WorkPermit
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q Bring about Economic Growth, Upgrade Technology, enhance the Quality of Product,increaseEmploymentandExport
q Investigation and decision making on applications is done by ForeignInvestment Board under the chairmanship of Vice Minister of Economic Affairs &Finance
q Assignment of whole or a part of the foreign Capital to a local and/or toanotherForeign InvestorisPermitted
q Foreign Capital may be imported by way of one of combination of thefollowings:
– Cash Fund to be converted into Rials– Cash Funds not to be converted for the purpose of Purchases– Non Cash Items
General Condition for Admission for Foreign Capital
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Final license issued by Minister of Economic
Affaires and Finance
Investment Licensing Procedure
SubmissionOf
Application
OIETAIPreparation
AndSubmissionOf a Report
ForeignInvestment
Board forReview
Draft license communicated
Request forReconsideration
Request forReconsideration
Max 5 Days Max 10 Days
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1. Application Form
2. Establishment License / Primary Agreement / Preliminary agreement of thepertinent Iranian organization
3. Official letter of the foreign investor to submit to the OIETAl
4. The Foreign Investors background including a brief history of the company , activities(In case of foreign investor is a natural person , a photocopy of passport and resume willbe provided).
5. A list of machinery, equipment and CKD part which may be imported into thecountry as a part of the foreign investors capital
6. For technical know-how, a draft of the contract outlining the conditions of thetransfer of technology.
Required Documents for Foreign Investment License
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• All real or legal owners, for their properties inside Iran
• Any real person residing in Iran for the incomes earned inside and outside the country
• Any Iranian real person residing abroad for all the income hemakes in Iran Any Iranian legal entity for the incomes earned inside or outside the country
• Any non-Iranian real or legal entities for the income earned inIran and also for the income gained through delegation of authority, dealership, technical and educational assistance or movie contracts (for any sort of income earned as rental, right of display and the like) in the territory of Iran
Taxable Real and Legal Entities According to Direct Taxation law
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Rate Subject
25% ThetotalincomeofcompaniesaswellastheincomegainedthroughdifferentsourcesbylegalentitieslivingabroadorinsideIran
25% TheIraniannoncommerciallegalentitieswhichhaveengagedinprofit-makingoperations,whiletheyareinitiallynotestablishedtodoso
25% Thenon-Iranianlegalpersonsandentities livingabroad
Rate Subject
2% TheforeigninsurancecompanieswhichreinsureIranianinsurancecompanies
5% ThetaximposedonforeignairlinesandshippingcompaniesinvolvedincarryingpassengersandfreightfromIran
Exemption
CorporateTaxIncome
Exemptions Rateofexemption
Duration
TheincomemadebymanufacturingandminingunitswhoseoperationlicenseshavebeenissuedafterApril27,1992andarelocatedoutsidearadiusof120kmeither fromthecityofTehran,or50kmfromthecityofIsfahanor30kmfromthecitieshavingapopulationof300,000andmore
80% 4years
Theproductionunitslocateddeprivedareas 100% 10yearsTheincomemadethroughexportsofindustrialfinishedproducts 100% perpetualTheincomemadethroughexportsofallproductsalreadylistedasthosewhicharelegal tobeimported
50% perpetual
AllbusinessactivitiesintheIraniantradezonesareexempt fromincomeandpropertytax 100% 20years
Theexportsofnon-oilcommoditiesandservice,withanexceptionoftherawmaterialandgoodswhichhavelowvalue-added
100% Until2016
Theinterestofferedbybanksandothercreditinstitutionstofixeddeposits,savingsorcurrentaccounts
100% perpetual
Theinterestpaidforgovernmentandtreasurybonds 100% perpetualTheinterestofferedbyforeignbankswhichreceive loanshavefixeddepositsinIranianbanks
100% perpetual
Theinterestofferedonlandreformbonds 100% perpetualThemoneypaidbytheNationalDevelopmentFund 100% perpetualTheincomegeneratedbytheagricultureandhorticulturesector 100% perpetualTheincomeearnedthroughswappinggoodsthroughIran 100% perpetual
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Highlights of Tax Holidays
Fixed corporate income tax at a flat rate of 25%
Activity LevelofExemption DurationofExemption
Industry&mining 80% 4years
Industry&MininginlessdevelopedArea 100% 20years
Agriculture 100% Perpetual
Tourism 50% Perpetual
ExportofServices&non-oilgoods 100% During5th DevelopmentPlan
SalaryinLessDevelopedArea 50% Perpetual
ProfitusedtoDevelopmentofExistingunitesorSettingupNewUnites
50% Perpetual
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New Tax Incentives enforceable from March 2016
Income Tax with Rate of 0.0% Duration of Exemption
Industry, Mining & Services (Hospital & Hotels) 5 Years
Industry, Mining & Services (Hospital & Hotels) in IndustrialParks and Economic Especial Zones
Industry, Mining & Services (Hospital & Hotels) in LessDeveloped Areas
7 Years
10 Years
Industry, Mining & Services (Hospital & Hotels) in LessDeveloped Areas located at Industrial Parks and Economic 13 YearsEspecial Zones
In companies with more than 50 employees, in case of increasing the employment volume up to 50% in comparison to lastyear, one-year exemption can be added to the above duration.
In the case that foreign companies with reliable Brand produce goods in Iran andexport at least 20% of total production, can enjoy 50% on Tax Rate for the income from sales of products (12.5 % instead of 25%) after the end of above duration.
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• Fixed0.5%taxrateontransferofshares instockexchange
• Taxexemptiononinterest received fromfixed-income instruments
• Absenceofdoubletaxationasthere isnotaxondividends received
• ForeigncompanieswhousetheIranianmanufacturingcapacitytoexportatleast20%oftheproductswitharespectablebrandcanenjoythezerotaxrateduringthisperiodanda50%reductionontaxpayableaftertheperiod
Other Tax Provisions
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Value-Added Tax Act (VATA) in Iran
q Currently, the VAT rate stands at 9%
q Economic activities in free trade and industrialzones are exempted from value-added tax.
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Value-Added Tax Act (VATA) in Iran
• TaxableEntitiesAllentitiesinvolvedinsupplyofgoodsandservices andintradeactivitiesaresubjecttotheprovisionsoftheVATLaw.
• TaxableTransactionsInIran,alltransactionsinvolvedinthesupplyofgoodsandservicesorintheimportactivitiesaresubjecttotheprovisionsoftheVATLaw.
• RateVATrateinIranis9%for1395(March21,2016– March19,2017).
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Custom Exemption for Foreign Investors
Production Line
Machineries and
Equipment (First-HandMachineries)
Raw Materials used forProduction of Export
commodities
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International legal infrastructure, affiliations and relations
Treaty
Membership
Cooperation
•Bilateral Investment Treaties (BIT) with 53 Countries •Regional & Multilateral Treaties with Member states of Organization of Islamic Cooperation (OIC) & Economic Cooperation Organization (ECO)•Double Taxation Treaty (DTT) with 44 countries
•Multilateral Investment Guarantee Agency (MIGA)World Association of Investment Promotion Agencies (WAIPA)
•FIAS: Assessment of Investment Environment in Iran •UNIDO: Capacity Building in Industrial Investment Promotion •UNCTAD: Preparation and Launch of World Investment Report (WIR) and other Surveys
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NATIONAL DEVELOPMENT FUND of IRAN (NDFI)
• The National Development Fund of Iran is purposed to allocate 20% of national Oil &Gas revenues to help spur economic development and production.
• The National Development Fund will allocate its resources to investment projects atLIBOR +%3-%5 .
• Provision of facilities out of the National Development Fund to the private, cooperativeand public nongovernmental sectors
• Aimed at production and development of investment domestically and internationally,considering the competitive conditions and proper economic output
• Provide financial facilities for joint ventures and mutual projects of domestic andinternational investors (eligibility mandates that minimum 30% stake should be raisedby the foreign party)
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