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Investment Climates >> Annex
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Council of Ministers' Decree
(No.H15891T/5125 Date:Aug.6,1996)
Ministry of Economic Affairs and Finance
The Council of Ministers in its meeting held on 23.03.1375 (12 June, 1996)
acting upon recommendation No.66080021/31215 dated 24.08.1374 ( 14 November
1995 ) of the Ministry of Economic Affairs and Finance , in relation to
investments covered by the Law for the Attraction and Protection of Foreign
Investments- enacted in 1334 (1955) - approved the following :
1. The import of machinery, equipments and raw materials as part of the
investment contribution of foreign investors , whether in the form of equity
capital or shareholder's loan , is not subject to the Council of Ministers'
decrees relating to the import and banking regulations , and shall be merely
governed by the Law for the Attraction and Protection of Foreign Investments of
1334 ( 1955 ) and its implementing regulations of 1335 (1956) and the
subsequent amendments thereto.
The Ministry of Commerce , subject to the approval of the Organization for
Investment , Economic and Technical Assistance of Iran ( O.I.E.T.A.I.) based on
the agreement of the Supervisory Board for the Attraction and Protection of
Foreign Investments , shall take measures for registration of orders and
issuance of license for delivery of the said machinery , equipments and raw
materials from the Customs.
2. The export of the products produced by joint venture companies in the manner
prescribed in the permits related to the admission of foreign investments ( the
relevant decrees ) , to the extent that the foreign currency earned from the
aforementioned exports covers the foreign currency requirements of these
companies with respect to :
- the import of raw materials and semi- fabricated parts related to their own
products ,
- other current foreign currency requirements including repayment of the
principal as well as payment of the profit (interest) on the loans extended by
foreign investors ,
- foreign currency expenses related to ( transfer of ) technology, management
and technical services agreements ( according to the relevant decrees ) , as
well as
- the required foreign currency for the transfer of annual transferable
dividends of foreign investors , is permitted , and shall be exempt from the
present governmental regulations and / or any regulations in future ,
restricting the exports by way of quantity and deposition of a foreign exchange
undertaking for the return of the foreign exchange derived from exports. The
exporters are required , prior to the export of goods , to define the sum
withdraw able from the foreign currency revenues for each of the purposes
provided for in this clause , and seek the approval of the Supervisory Board
for the Attraction and Protection of Foreign Investments . The Ministry of
Commerce is under obligation to issue the export license only upon confirmation
of the O.I.E.T.A.I.
3. The import of machinery , equipments and raw materials, and in return , the
export of the products , up to the approved figures in projects where the
foreign investment is admitted with no equity participation but through project
financing mechanisms shall also be subjected to the facilities stipulated in
clauses 1 and 2 above . Repayment of the principal as well as payment of the
profit (interest) on the financial facilities related to projects under this
clause, shall exclusively be permitted out of the export (proceeds) of products
of the same project .
4. The foreign currency revenues derived from services and tourism activities
of foreign investments may be utilized for the purposes stipulated in clause 2
above pursuant to the approval of the Supervisory Board for the Attraction and
Protection of Foreign Investments .
5. The export (of products) in excess of the specified quantity and utilization
of the foreign currency revenues in excess of the purposes defined in the
Decree, within the framework of the laws and regulations of the country , is
permitted.
6. All companies and entities falling under this Decree, may keep the foreign
currency revenues derived from their activities up to the ceiling approved by
the O.I.E.T.A.I. in an escrow account with a
local or foreign bank , and directly withdraw therefrom for defined purposes.
Note : with regard to those companies which are established with the
participation of governmental companies, the opening of account with foreign
banks is dependent upon the approval of the Central Bank of the Islamic
Republic of Iran .
7. Activities other than those which fall under the priority first of the
Decree No. H11463T/1361 dated 11.02.1374 ( 30 April, 1995) as well as future
substituting decrees, other industrial and mining activities with foreign
participation shall fall under the priority second and shall enjoy a six- year
tax exemption . The yearly increase of tax exemption as a result of locating
the aforementioned units in deprived areas shall continue to be in force.
Hassan Habibi
First Vice President
Decree : No. H15891T/5125
Date : Aug.6,1996
Council of Ministers' Decree
(No. 22021T/45271 Date: 13, Nov. 1999)
Ministry of Economic Affairs and Finance
The Council of Ministers in its meeting held on 28.07.1378 (20.10.1999) , by
virtue of principle 138 of the Constitution of the Islamic Republic of Iran ,
approved the criteria for admission of foreign investments under the Law for
the Attraction and Protection of Foreign Investments (LAPFI)- enacted in 1334 (
1955) - as follows:
Criteria for Admission of Foreign Investments
under the Law for the Attraction and
Protection of Foreign Investments
Article(1) :
Applications for foreign investment which have been approved, through the
Organization for Investment, Economic and Technical Assistance of Iran ( OIETAI
) within the framework of this Decree, by the Supervisory Board* referred to
Article (2) of LAPFI, shall be covered by LAPFI after ratification by the High
Council for Investment stated in Article (7) of OIETAI's Charter.
Note - Such approval requires a positive vote of majority of member ministers
of the High Council and shall become effective after being re-affirmed by the
President, and subsequently promulgated with due observance of Article (19) of
the Cabinet Bill.
Article (2) :
Foreign investment projects, in addition to creating employment opportunities,
are required to serve, at least , one of the following purposes:
(1) Promotion of the Iran's non-oil exports;
(2) Completion of links of the country's production chain;
(3) Exploration and exploitation of underground resources as well as
processing ( industrial - mining complexes);
(4) Increasing market competition and upgrading the quality of
products and services as well as reducing prices in Iranian
territory.
Article (3):
Remittance of profit and other foreign exchange transfers related to foreign
investment approved by the Supervisory Board is solely permissible out of the
foreign exchange earnings or annulment of foreign exchange commitments related
to the export of goods and services of the recipient investee firm in which the
foreign capital is employed.
In the event that the export of goods and services by the recipient investee
firm is prohibited by the Government, the foreign exchange required for
transfer purposes shall be provided out of a special credit made available to
the OIETAI for such purposes.
Article (4):
Foreign investment shareholding in companies to be registered in Iran for the
implementation of a foreign investment project ,and/or in existing registered
companies in which foreign investment is made to enhance capacity and
production, is permissible in the following manner. The proportion of foreign
shareholding shall be determined in each of the following categories upon
mutual agreement between the parties involved:
a) In projects aiming at, inter alia, promoting non-oil exports, completing the
links of production chain, mining- industrial complexes, increasing market
competition, upgrading the quality of goods and services, and reducing prices,
up to 80% of the shares of joint venture companies may be presented to foreign
investors.
b) In projects aiming at exploration and exploitation of mines and underground
resources, a maximum of 49% of the shares of joint venture companies may be
presented to foreign investors.
Note 1- Further increase in the foreign permissible shareholding in special
projects is possible upon recommendation made by the Supervisory Board and
approval of the Council of Ministers.
Note 2- Projects, under LAPFI, financed by foreign investors through buy-back
arrangements , B.O.T., and B.O.O.T. schemes, and/or any other project financing
mechancisms are not subject to restrictions related to foreign permissible
shareholding .
Article(5) :
Part of foreign investors' imported capital may be covered under LAPFI in the
form of financial facilities. The related installments of principal and profit
( financial charges and costs ) thereto shall be transferable in accordance
with Article (3) of this Decree.
Hassan Habibi
First Vice President
Decree : No. 22021T/45271
Date : Nov.13,1999
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