Initiating an investment in another country includes considerable risks which may cause hesitation in foreign investors. The different legal, tax, and commercial systems of each country can be the main reason for foreign investors’ doubtfulness. However, in Iran, there are several beneficial contributions established by the government for foreign investors, including Free Trade Zones.
Karimi & Associates Law Firm, as a professional entity that has assisted many foreign investors in Iran, provides you with a wide variety of legal, customs, and tax assistance. In case you need legal consultancy, you can contact us and enjoy our full services.
Free Trade Zones
In many areas of the world, governments have established Free Trade Zones and also Special Economic Zones to increase the number of investments, improve capital productivity and assure investors, especially foreign investors, that they will be subject to substantial advantages which are not accessible for any other investor in the regular zones or the “mainland”.
To define the Free Trade Zones, it can be said that these zones are some privileged geographical boundaries, mostly near the borders and seaports to support and raise domestic industries and also ease importing, exporting, and transiting goods as effectively as possible.
Free Trade Zones are one of the best tools to encourage exports of goods and attract foreign investments and technologies. Additionally, these zones can enhance the country’s status in the field of international trade.
Iran’s Free Trade Zones
Iran is a great vast country with many natural and industrial resources, including mines, seas and water sources, mountainous areas, and agricultural potentials due to the climate diversity and moreover the rich sources of oil, gas, and petrochemicals. Besides, the strategic geopolitical situation of Iran in the Middle East and its access to the Strait of Hormoz, Persian Gulf, and Sea of Oman are other impressing factors regarding investment in Iran.
Although the mentioned points are not the only privileges of Iran, the government has developed several areas of the country to provide domestic and also foreign investors with safe, productive and profitable regions and has entitled them as Free Trade Zones.
Currently, there are 7 Free Trade Zones in Iran, uncentered and across the whole country, as below:
- Free Trade Zone of Aras
- Free Trade Zone of Anzali
- Free Trade Zone of Maku
- Free Trade Zone of Arvand
- Free Trade Zone of Kish
- Free Trade Zone of Qeshm
- Free Trade Zone of Chabahar
As it is apparent in the map of Iran’s Free Trade Zones, these zones are mostly neighboring the seas and water borders of Iran which genuinely facilitate transporting of goods and international trade.
Therefore, as a foreign investor, you can establish your company and business in the Free Trade Zones of Iran and enjoy many existing advantages.
Benefits of Company Registration in Free Economic Zones
The legal system governing the Free Trade Zones of Iran is distinct from the other zones of the country. This particular legal system covers many aspects including tax, customs, corporate law, labor law, etc. What distinct the governing system on Free Trade Zones from the mainland is that in these zones, in almost all the relevant commercial, industrial, and trade activities investors benefit from fewer formalities, limitations, and even costs.
Foreign investors mostly tend to establish a company before initiating their business and investment in Iran. Due to the below benefits, we highly recommend Free Trade Zones for registering the company and starting an investment in Iran:
- Foreign natural persons and legal entities can establish companies with 100 % ownership, without being subject to any discrimination due to their foreign nationality. These companies, even with full ownership of non-Iranians, will be an Iranian legal entity and under the protection of Iran’s legal system,
- Investors can enjoy vast tax exemptions. Such as exemptions from paying Income Tax and Tax on Assets for 20 years.
- Investors are completely free in entering and exiting currency, their capital, and also profits, achieved from their activities in Iran.
- The regulations on Customs and transporting goods (import, export, transit) are not as strict as in other areas of the country and are mostly simpler. In these zones, investors face fewer challenges in transporting goods to Iran or other countries.
- The companies established in Free Trade Zones are entitled to Custom Duty and Tariffs exemptions. In case the investors intend to import industrial raw materials and production machinery, they will enjoy Custom Duties exemptions.
- It is possible for the investors to bring in non-Iranian employees to work in the zones. In such cases, investors can benefit from the easy issuance of the necessary visas for the residence of foreign employees.
- Compliance with the regulations on labor law is different in Free Trade Zones.
- Investors can benefit from a more flexible banking and financial system. Notably, currency exchanges for the companies in the zones are easier and can be simply done through Iranian banks in the mainland and their branches in the zones and other countries.
How to Establish a Company in Free Trade Zones of Iran
According to Iran’s regulations, all 7 types of Commercial Companies are authorized to be established in the Free Trade Zones, providing that the field of the company’s activity is legitimate and lawful. However, the best possible companies to initiate investment in Iran are Private Joint Stock Company and Limited Liability Company. As previously mentioned, each company registered in Free Trade Zones will be an Iranian company.
Regarding establishing a company in Free Trade Zones, some steps that need to be taken by the investors. According to the Resolution on Company Registration and Industrial and Intellectual Properties in Free Trade – Economic Zones of Iran, in each Free Trade Zone, there is an entity entitled “The Entity of Company Registration and Industrial and Intellectual Properties”. This entity provides several services, listed as below:
- Registering Iranian and foreign companies and non-commercial institutions,
- Registering commercial and industrial trademarks and trade names,
- Registering inventions (patents) and industrial designs,
- Registering offices,
- Registering financial institutions and companies, regarding the Bylaw on Financial and Banking Operations in Free Zones,
- Registering insurance companies, regarding the specific regulations of Free Zones.
To register a company in Free Trade Zones, all below documents are required:
- Application of Registration, including company’s name, field of activity, domicile, nationality, amount of capital, etc.
- Company’s Articles of Association
- Minutes of the General Founding Assembly
- Minutes of the first meeting of the Board of Directors
- A certificate from one of the banks in the Free Zone, confirming the deposit of the minimum capital (35 percent)
After submitting the documents, the Registration Department of the Free Zone Organization deliberates applicant’s request and in case of approval, a sealed document proving the registration of company’s legal personality, will be issued and rendered to the company’s representative. This sealed document is a mandatory requirement for the initiation of the company’s official activity in the Free Zone.
In the end, if you intend to start an investment in Iran and register a company whether in Iran’s’ Free Trade Zones or mainland, you can acquire all you need as a foreign investor by calling Karimi & Associates Law Firm and receiving our experts’ top-notch legal advice in all the relevant areas.