Iran Law of Foreign Capital

What the forms of foreign capitalbase on Iranian Law?

Foreign capital forms are very variable in accordance with foreign investment law and in addition to the cash capital, any non-cash forms including machinery, facilities, parts, raw materials, technical know-how and specialized services are included in them (for more information, please check article 2 of Executive By-law for Protecting Foreign Currency Investments).

Are all foreign currencies are acceptable in Iran for importing cash capital?

Only those currencies which are acceptable by the Central Bank of the Islamic Republic of Iran are acceptable currencies.

How does the cash capital arrive is imported to Iran?

The foreign cash capital arrives the country via bank system and/or official channels which are approved by the Central Bank. Obviously, foreign currency arrived to the country should be among the foreign currencies acceptable by the Central Bank.

Does the foreign currency cash require to be converted into Rial currency?

That part of the foreign currency cash which according to the investor’s discretion needs to be converted into Rial currency will be bought by the foreign currency recipient bank in current rate and the Rials equivalent will be remitted to the account of the joint company or the investee economic business firm.

Is foreign investor allowed to keep the imported foreign currency cash without converting it and use it for paying the price of foreign orders for the investment plan?

Cash foreign currency could be converted into Rials currency or can be kept in the foreign currency account of the joint company or the investee’s firm; and by supervision of Investment Organization, it can be used for paying the foreign orders price or other necessary expenses of the project with no changes. Keeping capital in foreign currency not only saves the investor from fluctuations of exchange rate, but also, makes it possible for it to use it at its discretion in suitable time.

What is the minimum deposit of foreign insurance company in any insurance field/risk?

By virtue of Article 46 of the Establishment Act of Iran Central Insurance Act and Insurance Broker, “the deposits of foreign insurance institutes” section, foreign insurance companies should deposit a certain amount for any of the two risks- life insurance and other types of insurance- at the Central Insurance of Islamic Republic of Iran. This deposit for each one of the two categories is minimum five hundred thousand USD or its equivalent currency of the types of currencies acceptable by the Central Bank of the Islamic Republic of Iran. In addition, any foreign insurance company should add to this deposit each year proportion to their revenue until the deposit reaches minimum twice the amount passed by High Council of Insurance. Adding to this deposit beyond that is optional. It should be noted that deposit passed by High Council of Insurance is the same minimum amount as stipulated in law (five hundred thousand USD).

What exchange rate is used for converting the foreign currency imported to Iran?

The calculation rate for cash capital of foreign investors is the current exchange rate in official money market of the country and/or free market rate at the discretion of central bank.

Does the foreign capital need undergoing appraisal for due assessments?

Yes, appraising the value of foreign capital, whether in cash or non-cash capital form is mandatory. For cash and non-cash capital, the exchange rate on the arrival date will be basis of evaluation.

What are the formalities for importing machineries, facilities, parts and raw materials (non-cash capital)?

Essentially, non-cash capital import for foreign investment does not need meeting formalities for trades cargoes import and only, at the proposal of Investment Organization, non-cash items of any nature which have been already undergone statistics order registry at the Ministry of Commerce based on the approved list could be imported to the country directly.

Does it mean importing non-cash capital needs no certificate of non-manufacturing, foreign currency allocation and L/C opening?

It is true; importing non-cash capital needs no certificate of non-manufacturing, foreign currency allocation and L/C opening.

Does non-cash foreign capital import require any specific payments?

Foreign non-cash capitals, excluding production line machineries for industrial and mining plans, like other imported goods are subject of import duty payment.

What measures should be observed on importing technical know-how?

The technical know-how and specialized services have been recognized as acceptable form of foreign capitals and will be registered as non-cash foreign capital after due appraisals. Of course, before technical know-how arrival, the opinion of the relevant ministry should be received as well.

Is it authorized to pay license or royalty rights?

Yes, in the events when technical know-how is not supposed to be accounted for as foreign capital, the relevant fund and/or the approved royalty could be paid to the technology provider.

What are the acceptable measures for paying license or royalty to foreign parties?

In any payment method, the raw materials imported should be engaged in calculating royalty and license fee and the net amount will be payable to the licenser after deducting the value of imported materials. In another word, based on current policy, payment of royalty and license will be calculated based on local value added.

Is it possible to register the patent and trading marks?

The industrial and intellectual ownership right, including patent, trademark, trade names, etc. will be registered and protected by law based on Patents of Trademarks and Inventions.

Is presenting the list of non-cash capitals is necessary before taking any actions?

Yes, before attempt to import the capital, foreign investor should submit to the Investment Organization the information including technical specifications, manufacturer’s name, manufacturing year and the price along with the relevant catalogues. When the list is approved, the non-cash capital can be imported to the country without any specific formalities as per the investor’s discretion in one or more parties.

Does technical knowledge import require previous studies?

Contracts of technical knowledge and specialized services, whether arrived to the country as capital, whether there is supposed to receive payments for them should be submitted to the Investment Organization along foreign investment application. The Investment Organization will perform necessary consultation with relevant ministries on the necessity of receiving technical know-how and its price.

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