chapter 1- definitions
all terms and expressions defined in article (1) of the foreign investment promotion and protection act (fippa) shall have the same meanings in these regulations.
other terms and expressions used in these regulations shall have the following meanings:
regulations: the implementing regulations of the foreign investment promotion and protection act.
investee firm: a new and/or an existing iranian company in which the foreign capital is utilized under one of the methods specified in fippa.
non-governmental sector: private and cooperative sectors and non-governmental public institutions and establishments.
center: the center for foreign investment services, established in accordance with article (7) of fippa at the premises of the organization.
country?s official monetary network: the banking system (the central bank and the banking network, being governmental or non-governmental) and non-banking credit institutions which, upon the permission of the central bank, are dealing with monetary and foreign exchange activities.
audit firm: an audit firm, selected by the organization from amongst the audit firms which are members of iran association of certified accountants, subject matter of the ?law governing the use of specialized and professional services of competent accountants as official accountant? - enacted in 1993 - or the auditing organization.
chapter 2- investment methods and criteria for admission
foreign investments admitted in the territory of the islamic republic of iran on the basis of fippa, shall enjoy the facilities and protections available under fippa. admission of such investments is subject to the general conditions for admission of foreign capital and submission of a written application by the foreign investor, and with due observance of the criteria set forth in these regulations.
admission of foreign investment, based on fippa and the criteria set forth in these regulations, may be carried out within the framework of the following methods. the table of investment methods, features and facilities available under fippa shall be prepared and published by the ministry of economic affairs and finance.
a. foreign direct investment ( fdi)
b. foreign investment within the framework of contractual arrangements including various types of ?build-operate- transfer?(bot), ?buy-back?, and ?civil participation?* schemes.
methods of investment referred to in article (3) of these regulations, in respect of the procedure for investment and the protection coverage of fippa and these regulations, have the following common or specific features and advantages:
a- common features and advantages:
? 1. foreign investors enjoy the same treatment as accorded to domestic investors.
2. import of foreign capital, being cash or non-cash (in kind), is only subject to the investment license and does not require any other license.
3. the volume of foreign investment in each individual case shall not be subject to any limitation.
4. foreign capital is guaranteed against nationalization and expropriation, and in such cases the foreign investor shall be entitled to receive compensation.
5. transfer of the principal capital, profit and capital gains derived from utilization of capital shall be effected in the form of foreign currency or, as the case may be, in the form of goods as set out in the invetsment license.
?????? * : similar to unincorporated partnership.
? 6. the freedom to export goods produced by the investee firm is guaranteed and, in the event of any prohibition on the export, the goods produced may be sold in the domestic market, and proceeds of sale shall be transferable abroad in the form of foreign currency through the country?s official monetary network.
? ?b- specific features and advantages:
? 1. foreign direct investment:
??? 1.1. investment may be made in all areas where the private sector activity is permitted.
? ?? 1.2. there is no restriction on the percentage of foreign shareholding.
? 2. investment within the framework of contractual arrangements:
??? 2.1.compensation for losses sustained by the foreign investment resulting from prohibition and/or interruption in the execution of financial agreements caused by enactment of law and/or cabinet decrees, up to a maximum of matured installments, shall be guaranteed by the government.
?? ? 2.2. in ?b.o.t.? and ?civil participation? schemes where a government agency is the sole purchaser and/or supplier of goods and services at subsidized prices, the purchase of produced goods and services resulting from an investment project by the government agency as a party to the contract, shall be guaranteed in accordance with the relevant regulations. article 5:
iranian natural and juridical persons applying for investment in the country, for the purpose of enjoying the facilities and protections under fippa, are required to submit documentary evidences proving their economic and commercial activities outside the country. article 6:
foreign investors who have already invested in iran without the benefit of coverage of fippa may, upon completion of the admission procedure, benefit from fippa?s coverage for the principal investment already made. subsequent to the issuance of the investment license, the investor shall be entitled to benefit from all privileges of fippa including, inter alia, the right to transfer profit. this type of investments shall be generally considered as existing investments to which the general criteria for admission of foreign capital is applicable.
foreign investment in existing firms by way of purchasing shares and/or capital increase and/or a combination of the two, subject to completion of the admission procedure, shall benefit from the privileges of fippa provided that such investment creates added value. the added value so created may result from an increase in investment in the existing firm and/or achievement of certain objectives such as enhancement of management, increase in exports, and/or improvement in the technology level of the existing firm.
the board, in the course of examining and issuing the license for any foreign investment application, shall investigate and verify the ratios set out in para (d) of article (2) of fippa in the following manner:
a.specifications of the proposed project including the type and volume of goods and services to be produced, the time-schedule for the implementation and operation of the project, as well as projection for domestic or export sales, will be set out in the application forms for investment.
b.the official statistics provided by the competent authorities relating to the value of goods and services supplied to the domestic market in every sector and sub-sector (field) at the time of issuance of the investment license shall be obtained by the deputy for economic affairs of the ministry of economic affairs and finance. the bases for the board?s decisions shall be the statistics made available to the organization by the aforementioned deputy up to the end of the first quarter of each year.
? c. sectors and sub-sectors (fields) shall be distinguished on the basis of the list attached to these regulations.
? d. the volume of investment in each sector and sub-sector (field) shall be determined by the board in accordance with the provisions of paras (a), (b) and (c) of this article, and the value of goods and services supplied to the domestic market, and with due observance of the exception from investment limitation on the export of goods and services derived from foreign investment, and, in the event of approval of the project, the investment license shall be issued.
note ? changes in the ratio of the value of goods and services resulting from foreign investment and/or changes in the value of goods or services supplied to the domestic market, which at the time of issuance of the investment license have constituted the bases for the board?s decision, shall not affect the validity of the investment license once it is issued article 9:
assignment of the proprietary rights to the iranian party designated in ?b.o.t? contracts may, on the basis of the agreement of the parties to the contract, be effected by way of gradual assignment of proprietary rights during the contract period, or single assignment of the acquired rights at the end of the contract period. article 10:
in ?b.o.t? contracts, the proprietary rights of the foreign investor may be assigned to the institution providing the financial facilities to the investment project upon the confirmation of the board. article 11:
with respect to those investment projects where a government agency is the exclusive purchaser of produced goods and services as well as cases where the goods and services produced by the investment project is supplied at subsidized prices, the government agency may, within the established legal framework, guarantee the purchase of the goods and services produced at the price and quantity determined in the relevant contract