The optimal approach to initiating business endeavors in Iran is contingent upon the unique circumstances and objectives of each company.

Individuals and entities seeking to engage in economic activities in Iran are required to obtain a ‘commercial card’ after completing registration with the following authorities:

• Ministry of Industry, Mines, and Trade
• Iran Chamber of Commerce, Industries, Mines, and Agriculture

1.1  Establishment of a Company in Iran

All entities conducting commercial activities in Iran must be registered on the commercial register. Businesses can be established either within Iran or within one of its numerous economic free zones.

Non-Iranian nationals have the option to establish:

• Private joint-stock companies
• Limited liability companies
• Branch offices
• Representative offices in Iran

Joint-stock companies (limited by shares) are commonly preferred by foreign investors, although the selection of company type hinges on the nature and scope of the business.

Official company documents must be prepared in Farsi. Moreover, documents submitted to an Iranian court necessitate translation by an official translator and certification by the judiciary or notarization by the Iranian Embassy in London.

Foreign investors in Iran are required to register with pertinent government bodies, including:

• Iranian Foreign Investment Board
• Companies Registrar
• Ministry of Cooperatives, Labor, and Social Welfare
• Local municipality
• Iranian National Tax Administration

Seeking legal counsel is advisable to ensure compliance with all relevant requirements pertinent to the business operation and location.

Iran functions as an Islamic Republic, and its legal system is rooted in Sharia principles, supplemented by influences from the French commercial code and company law. Codified areas of business law encompass:

• Labor law dating back to 1990
• Copyright law established in 1990, along with the Intellectual Property Law of 2009
• Foreign Investment Law from 1956, with subsequent regulations enacted in 1999

2.1 Labor Regulations in Iran

Employment matters in Iran are governed by the Labor Code of 1990, applicable to both Iranian and foreign employees. While sharing similarities with employment laws in other Middle Eastern nations, it uniquely stipulates a one-month notice period for resignations, with a provision allowing employees to rescind their resignation within 15 days.

Non-Iranian nationals necessitate immigration permits and work licenses to work in Iran. Stringent regulations govern the employment of non-Iranian nationals, particularly if qualified Iranian citizens are available for the respective roles.

2.2 Foreign Investment in Iran

Iran’s foreign investment laws permit 100% share ownership in most industries, subject to limitations in sectors such as the nationalized oil and gas industry, certain real estate holdings, and banking and insurance, unless investments are conducted offshore.

The Foreign Investment Promotion and Protection Act (FIPPA) safeguards non-Iranian investors and promotes foreign investment by ensuring equitable treatment, facilitating capital repatriation, and expediting investment licensing and approvals. FIPPA defines foreign capital broadly and permits investment across various industries and fields.

Foreign direct investment under FIPPA can be made through equity participation or contractual arrangements, with licenses providing privileges concerning visas, residency, and work permits.

Prior to commencing operations under FIPPA, foreign investors must obtain a license from the Organization for Investment, Economic, and Technical Assistance of Iran (OIETAI), typically issued promptly upon demonstrating eligibility and submitting a comprehensive business plan.

Dispute resolution mechanisms in Iran encompass arbitration clauses in commercial contracts, enabling resolution through arbitration forums such as the International Chamber of Commerce International Court of Arbitration, subject to certain regulatory approvals.

2.3 Intellectual Property Protection in Iran

Iran, a signatory to the International Convention for the Protection of Industrial Property, maintains an Industrial Property Office to promote IP protection and encourages adherence to international agreements and treaties. Patent and trademark registrations in Iran are subject to specific durations and procedures, with avenues for appeal in the case of rejected applications.

While copyright regulations are not formally regulated under Iranian law, provisions exist for the protection of authors, composers, and artists, extending to foreign nationals within the Islamic Republic of Iran.

3.1 Taxation Framework

Iran’s taxation system operates on a self-assessment basis, with corporate profits taxed at the corporate level and dividends distributed to shareholders exempt from tax. Residents are subject to taxation on worldwide income, while foreign entities are taxed based on income sourced from Iran.

Companies and branches, both Iranian and foreign, must file annual corporate income tax returns, adhere to tax registration requirements, and obtain an economic code to operate in Iran. Value Added Tax (VAT) rates, corporate tax rates, and withholding tax provisions apply to various transactions and entities.

3.2 Customs Regulations

Iran’s customs laws impose duty rates on imported goods, calculated based on the cost, insurance, and freight value. The Islamic Republic of Iran’s Customs Administration oversees customs regulations, adhering to international treaties and conventions governing trade and transport of goods.

Importers must register with relevant authorities and adhere to import procedures delineating permissible, conditional, and prohibited goods. Free trade zones offer exemptions from import duties for goods destined for re-export or local consumption within the zones, subject to specific regulations and conditions.

Dual nationality is not recognized in Iran, necessitating careful consideration for individuals traveling to the country. Obtaining a visa for Iran entails complex procedures, with waiting times and requirements varying based on the type of visa sought.

Business travelers can obtain various types of visas, including those for non-fee earning trips, business visitors with the right to work, and investor visas under FIPPA. Each visa category entails specific application processes, documentation requirements, and validity periods, necessitating coordination with Iranian authorities and sponsors.

Work permits and residence permits are essential for extended stays and employment in Iran, subject to stringent regulations and procedures. Compliance with entry and exit requirements, tax obligations, and visa regulations is imperative for individuals and entities conducting business activities in Iran.