INTRODUCTION

Foreign Investment is an application of foreign capital in a new or existing economic entity and a Foreign Investor is a non-Iranian natural and/or legal person or an Iranian using capital from foreign source. (Article 1.FIPPA)

Foreign Investment is welcome in Iran especially in the company of Iranian partners in different fields of business. This is however, provided that it adheres to regulations some of which are mentioned hereunder.

GENERAL POLICIES OF THE IRANIAN GOVERNMENT

Constitutionally speaking, general policies of the Iranian Government have to be drawn by the Council of Expediency (Majma Tashkhis Maslehat Nezam)

Recently Majma has ratified some policies in order to give foreign investors more of an incentive for bringing their capital into Iran and attracting them through facilitating policies to make investment in the country possible more than ever.

FOREIGN INVESTMENT PROMOTION AND PROTECTION ACT

...or FIPPA was entered into force in the last year and is the most important legal resource in this special regard. (For more see: Some Important Data For Foreign Investors)

BILATERAL INVESTMENT AGREEMENTS / TREATIES

Within the Presidency office a committee called "Commission for International Agreements" has prepared a sample agreement according to the attitudes of the Iranian Government which is considered as the main source of reference for all Iranian bodies which somehow deal with the question of foreign investment. The sample agreement contains favorite articles for the special reason of attraction and promotion of foreign investment among them, however, are the issue of avoidance of double taxation and settlement of disputes through arbitration.In Bilateral Investment treaties, two parties can determine a special method for settlement of their prospective disputes, other than the one pointed to in article 19 of the FIPPA Act. (See: Settlement of Disputes)

NOTE: Should you have any enquiries or need any information about the system of Avoidance of Double-Taxation, contact Iran Business Lawyers at Dr.Shamsaei & Associates.

SOME IMPORTANT DATA FOR FOREIGN INVESTORS

TWO CATEGORIES OF FOREIGN INVESTMENT:

Foreign direct investment in areas  where the activity of private sector is permissible;

Foreign investments in all sectors within the framework of "civil participation", "buy-back" and "build-operate-transfer" (BOT) arrangements 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, state-owned companies or banks.

THE OFFICIAL AUTHORITY:

The Organization for Investment, Economic and Technical Assistance of Iran, is the only official authority for the promotion of foreign investment in Iran. For the purpose of Investigation of all issues pertaining to foreign investment and making decision on applications, "Foreign Investment Board" is established under the chairmanship of the Vice Minister of Economic Affairs and Finance.

However, Applications of foreign investors in respect of issues such as admission, importation, employment and repatriation of capital shall have to be submitted to the mentioned Organization.

NATIONALIZATION, EXPROPRIATION, APPROPRIATE COMPENSATION:

Foreign investments shall not be subjected to expropriation or nationalization, unless for public purposes, in accordance with due of law, in a non-discriminatory manner, and upon payment of appropriate compensation on the basis of the real value of the investment immediately before the expropriation.

REPATRIATION:

The original foreign capital ,the accrued profits, or the balance of capital remaining in the country subject to a three month prior notice, after fulfillment of all obligations and payment of legal deductions, and upon confirmation by the Minister of Economic Affair and Finance, shall be transferable abroad.

SETTLEMENT OF DISPUTES:

Disputes arising between the Government and the foreign investors in respect of the mutual obligations within the framework of investments under the FIPPA Act (such as disputes arising from expropriation or nationalization), if not settled through negotiations, shall be referred to domestic courts, unless another method for settlement of disputes has been agreed under the Law for Bilateral Investment Agreement with the respective Government of foreign investor.