The terms and expressions used in this Act shall have the following
Act: The Foreign Investment Promotion and Protection Act.
Foreign Investor: Non Iranian natural and/or juridical persons or
Iranians using capital with foreign origin, who have obtained the
Investment License referred to in Article (6).
Foreign Capital: Various types of capital, whether in cash and/or
in kind, imported into the country by Foreign Investor, and comprising
a) Cash funds in the form of convertible currency, imported into the
Country through the banking system or other methods of transfer
Acceptable to the Central Bank of the Islamic Republic of Iran;
b) Machinery and equipments;
c) Tools and spares, CKD parts and raw, addable and auxiliary materials;
d) Patent rights, technical know how, trade marks and names, and
e) Transferable dividends of foreign investors;
f) Other permissible items approved by the Council of Ministers.
Foreign Investment: Employment of Foreign Capital in a new or
existing economic enterprise after obtaining Investment License.
Investment License: The license issued for each Foreign
Investment in accordance with Article 6 of this Act.
Organization: The Organization for Investment, Economic and
Technical Assistance of Iran, referred to in Article (5) of the law
establishing the Ministry of Economic Affairs and Finance, enacted on
July 15, 1974.
Board: The Foreign Investment Board, referred to in Article (6)
of this Act.
General Conditions for
Admission of Foreign Investments
Admission of Foreign Investment shall be made, in accordance with the
provisions of this Act and with due observance of other prevailing laws
and regulations of the country, for the purpose of development and
promotion of producing activities in industry, mining, agriculture and
services, and based on the following criteria:
a) Bring about economic growth, upgrade technology, enhance the
quality of products, increase employment opportunities and exports;
b) Does not pose any threat to the national security and public
and cause damage to the environment; does riot disrupt the
country's economy and jeopardize the production by local
c) Does not entail the grant of concessions by the Government to
Foreign Investors. Concession means special rights which place the
Foreign Investors sin a monopolistic position.
d) The ratio of the value of the goods and services produced by the
Foreign Investments. contemplated in this Act. to the value of the Goods
and services supplied to the local market, at the time of Issuance of
the Investment License. Shall riot exceed 25 percent in Each economic
sector and 35 percent in each field (sub sector). The Fields and extent
of investment in each field shall be determined in The by law to be
approved by the Council of Ministers. Foreign Investment for the
production of goods and services for export Purposes, other than crude
oil, shall be exempted from the aforementioned ratios.
Note: The Law for the Ownership of Immovable Property by Foreign
Nationals enacted on June 6. 1921 shall remain in effect. Ownership of
land of any type and to any extent in the name of Foreign Investors is
not permitted within the framework of this Act.
Foreign Investments admitted in accordance with the provisions of this
Act shall enjoy the incentives and protections available under this Act.
Such investments may be admitted under the following two categories:
a) Foreign direct investment (FDI) in fields where the activity of the
Private sector is permitted;
b) Foreign Investments in all sectors within the Framework of "Civil
Partnership", "Buy Back" and "Build Operate Transfer" (BOT) Schemes
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 or government Companies and/or banks.
Note: So long as the investment in "Build Operate Transfer" (BOT)
schemes referred to in Para (b) of this Article, and its accrued profits
are not amortized, the exercise of ownership right by the foreign
investor over the remaining capital ill the recipient economic
enterprise is permitted.
The investment by a foreign government or foreign governments in the
Islamic Republic of Iran shall be dependent upon the. Approval of the
Islamic Consultative Assembly, on a case by case basis. Investments by
foreign government companies are deemed private.
The Organization is the sole official authority for the promotion of
Foreign Investments in the country, and for investigation of all issues
Pertaining to Foreign Investments. Applications of Foreign Investors in
respect of issues such as admission, importation. Employment and
repartition of capital shall be submitted to the Organization.
For the purpose of investigation and making decision on applications
referred to in Article (5), a Board under the name of the "Foreign
Investment Boar& shall be established under the chairmanship of the Vice
Minister of Economic Affairs and Finance, who is ex officio the
President of the Organization, comprising of Vice Minister of Foreign
Affairs, Vice President of the State Management and Planning
Organization, Vice Governor of the Central Bank of the Islamic Republic
of Iran arid vice ministers of relevant ministries, as the case
In relation to applications for admission, the Investment License shall,
after the approval of the Board, be issued upon confirmation and
signature by the Minister of Economic Affairs and Finance.
At the time of admission of Foreign Investments, the Board is required
to observe the criteria referred to in Article (2) of this Act.
Note: The Organization, after preliminary review, shall submit the
Investment applications, along with its own recommendation, to the Board
within a maximum period of 15 days as from the date of the Receipt of
the applications. The Board must review the applications within a
maximum period of one month from the date of
Submission, and notify its final decision in writing.
In order to facilitate and expedite issues related to the admission and
activity of Foreign Investments in the country, all relevant agencies
including the Ministry of Economic Affairs and Finance, the Ministry of
Foreign Affairs, the Ministry of Commerce, the Ministry of Labour and
Social Affairs, the Central Bank of the Islamic Republic of Iran, the
Customs Administration of the Islamic Republic of Iran, General
Directorate for Registration of Companies and Industrial Property, and
the Organization for Protection of the Environment are required to
designate a fully authorized representative to the Organization by the
highest authority of the agency.
These representatives shall act as the liaison and coordinator for all
issues related to their respective agency vis-à-vis the Organization.
Guarantee and Transfer of Foreign Capital
Foreign Investments under this Act shall equally enjoy all rights,
protections, and facilities available to local investments.
Foreign Investments shall not be subjected to expropriation or
nationalization, unless for public interests, by means of legal process,
in a non discriminatory manner, and against payment of appropriate
compensation on the basis of the real value of the investment
immediately before the expropriation.
Note 1: Application for compensation shall be submitted to the Board
one year from the date of expropriation or nationalization.
Note 2: Disputes arising from expropriation or nationalization shall be
settled in accordance with the provisions of Article (19) of this Act.
Assignment of the whole or a part of the Foreign Capital to a local
investor and/or, upon approval of the Board and confirmation by the
Minister of Economic Affairs and Finance, to another Foreign Investor is
permitted. In case of assignment to another Foreign Investor the
assignee that shall have, at least, the same qualifications as the
initial investor shall replace and/or become a partner to the former
investor from the standpoint of this Act.
Provisions for Admission, Importation
And Repatriation of Foreign Capital
Foreign Capital may be imported into the country by way of one or a
combination of the following manners, to be covered under this Act:
a) Cash funds to be converted into Rails;
b) Cash funds not to be converted into Rails but to be used directly
For the purchases and orders related to Foreign Investment;
c) Items in kind, after evaluation by the competent authorities.
Note: Arrangements related to the manner of evaluation, and registration
of Foreign Capital shall be determined in the Implementing Regulations
of this Act.
The rate of conversion of foreign exchange applicable at the time of
importation or repatriation of Foreign Capital as well as the exchange
rate for all foreign exchange transfers, in case of applicability of a
unified exchange rate, shall be the same rate prevailing in the
country's official network; otherwise. The applicable exchange rate
shall be the free market rate as acknowledged by the Central Bank of the
Islamic Republic of Iran.
The principal of the Foreign Capital and profits therefore, or the
balance of capital remaining in the country, after fulfillment of all
obligations and payment of legal deductions, and upon approval of the
Board and confirmation by the Minister of Economic Affair and Finance,
shall be transferable abroad subject to a three month prior notice
submitted to the Board.
The profit derived from Foreign Investment after deduction of taxes,
dues and statutory reserves, upon the approval of the Board and
confirmation by the Minister of Economic Affairs and Finance, shall be
Payments related to the installments of the principal of the financial
facilities of Foreign and their associated expenses, agreements for
technical and engineering assistance. Trade Marks and names, as well as agreements
within the framework of the
relevant foreign investment upon approval of the board and Confirmation
by, the of Economic Affairs and are transferable aboard.
Transfers referred to in Articles (13), (14) and (15), shall be made in
compliance with the provisions of Para (b) of Article (3) of this Act.
The foreign exchange required for the transfers referred to in Article
(14),(15) and (16) of this Act may be secured in the following manners:
a) Purchase of foreign currency from the banking system;
b) Out of the foreign exchange earned from the export of the
Products and/or the foreign exchange earned from the service
Activities of the economic enterprise in which the Foreign Capital
c) Export of permissible goods specified in the list approved by The
Council of Ministers for implementation of this paragraph
In compliance with the relevant laws and regulations.
Note 1: Application of one or a combination of the above manners shall
be specified in the Investment License.
Note 2: With respect to investments referred to in Para (b) of this
Article, if, as a result of promulgation of legislation or Government
decrees, the execution of the financial agreements approved within the
framework of this Act is prohibited or interrupted, the resulting
losses, up to a maximum of installments at maturity, shall be provided
and paid by the Government. The extent of acceptable commitments within
the framework of this Act shall be approved by the Council of Ministers.
Note 3: The Central Bank of the Islamic Republic of Iran must secure and
make available to the Foreign Investor the equivalent foreign currency
for the transferable amounts referred to in Para (a), upon the agreement
of the Organization and confirmation by the Minister of Economic Affairs
Note4: Encase the Investment License expressly refers to Para (b) and/or
(c) of this Article, this Licence shall be deemed as the export license
Transfer abroad of the portion of the Foreign Capital into the
Country within the framework of the Investment License but remained
Is exempted from all foreign exchange, and export and import laws and
Settlement of Disputes
Disputes arising between the Government and the Foreign Investors with
regard to their respective mutual obligations within the context of
investments under this Act, if not settled through negotiations, shall
be referred to domestic courts, unless the Law ratifying the Bilateral
Investment Agreement with the respective Government of the Foreign
Investor provides for another method for settlement of disputes.
The relevant executive agencies are required to take measures, upon the
request of the Organization, for the issuance of entry visa, residence
permit, work and employment permit, as the case may be, for Foreign
Investors, managers and experts of the private sector linked to Foreign
Investments under this Act, as well as their immediate relatives.
Note: Differences of opinion between the Organization and executive
agencies shall be settled upon the opinion of the Minister of Economic
Affairs and Finance.
The Organization is required to ensure the access of the general public
to all information related to investment, foreign investors, investment
opportunities, Iranian partners, fields of activity and other
information, available to the Organization
All ministries government companies and organizations as well as
The applicability law to be stipulated
by name, are under obligation to provide the Organization with reports
on foreign investments implemented as well as the information required
for foreign investors so that the Organization can proceed in accordance
with the preceding Article.
The Minister of Economic Affairs and Finance is required to provide,
every six months, the relevant commissions of the Islamic Consultative
Assembly with a report reflecting the performance of the Organization
with respect to Foreign Investments under this Act.
As from the date of the enactment of this Act and its Implementing
Regulations, the Law for the Attraction and Protection of Foreign
Investments enacted on November 28, 1955 as well as its Implementing
Regulations, are repealed. Foreign capital previously admitted under the
said Law shall be covered by this Act. The provisions of this Act shall
be repealed or altered by subsequent laws and regulations provided that
the repeal or. alteration of this Act is expressly stipulated in such
laws and regulations.
The Implementing Regulations of this Act shall be prepared by the
Ministry of Economic Affairs and Finance and subsequently approved by
the Council of Ministers within two months.
The above Act comprising of 25 Articles and 11 Notes is enacted by the
Islamic Consultative Assembly in its session of Sunday, 10 March 2002.
The initial part of Articles (1) and (2), Para (c) and (d) of Article
(2), Para (b) of Article (3), and Note (2) of Article (17) has been
approved by the Expediency Council in its meeting on Saturday, May 25,