Manual to Foreign Investment in Iran

The Iranian government encourages foreign investment, and investors should read Iran’s Foreign Investment Promotion and Protection Act (FIPPA) and executive bylaws to learn about their rights, the benefits and protections they may receive, and the requirements of the legal obligation that come with investing in Iran.

This guide, created by the LegaMart team, briefly discusses international investor applications to the Iranian Investment Organization.

Is Foreign Investment Allowed in Iran?

Meanwhile, foreign investment is permitted in various areas in Iran for development, prosperity, and production. Only those investments that have already secured the required permit based on this law could benefit from the benefits and support offered by the Foreign Investment Promotion and Protection Act, according to the IRI’s government (FIPPA).

Guarantees and safeguards

Foreign capital is protected from nationalization and expropriation, and the foreign investor is entitled to compensation in such circumstances (Article 9 of the FIPPA).

If laws or government regulations result in the prohibition or termination of approved financial agreements within the scope of this Act, the government is responsible for obtaining and paying the damages (Article 17 of the FIPPA & Article 26 of the bylaws).

When a state-run organ is the only buyer or provider of a commodity or producer service at a subsidized price, foreign investment’s acquisition of products and producer services is guaranteed (Article 11 of the bylaws).

Investors’ Legal Commitments and Obligations

Foreign Investors’ applications for admission, importation, usage, and repatriation of capital under the FIPPA must be presented to the organization and followed up through that (Article 5 of FIPPA).

Within the framework of the license provided to the foreign investor, the foreign investor must announce the entrance of its capital, including cash and non-cash goods, to the Organization so that they can be registered and subjected to FIPPA. Failure to register the entered capital entails a loss of FIPPA protection. (See FIPPA Article 11 and the bylaws Article 24.) 

Iranians who want to use funds from other countries in Iran and be subject to FIPPA must engage in business and trade activities overseas and present the necessary paperwork to the Organization (Article 5 of the bylaws).

Acceptance of foreign investments (buying of shares) in Iranian enterprises and economic entities is possible if added value is developed in the financial unit following the purchase of shares.

Which country has the most foreign investment in Iran?

According to the United Nations Conference on Trade and Development, Iran ranked sixth in the world in attracting foreign investments in 2010. According to the President of Iran’s Organization for Investment, Economic and Technical Assistance (OIETAI), the country was rated 142 out of 181 countries in terms of working conditions in 2008.

Iran ranks 96th in terms of starting a business, 165th in obtaining permits, 147th in employment, 147th in registering assets, 84th in securing credit, 164th in legal support for investments, 104th in tax payment, 142nd in international trade, 56th in contract feasibility, and 107th in bankruptcy. Iran is a member of the Multilateral Investment Guarantee Agency of the World Bank. Iran is ranked 69th out of 139 countries in the Global Competitiveness Report. Iran has around 50 bilateral investment accords signed with foreign nations.

However, let us separate countries by continents for statistical purposes:

  • Asia: India (Via Chabahar Port), United Arab Emirates (UAE), Singapore, Indonesia, and Oman, are the leading countries with over 190 projects and an amount of $11.6B
  • Europe: Germany, the Netherlands, Spain, the UK, Turkey, Italy, and France, invest over $10.9B with around 253 projects
  • Americas: Canada, Panama, the USA, and Jamaica, spent $1.4B on around 7 projects
  • Africa: Mauritius, Liberia, and South Africa, which invest $8B

Keep in mind that the numbers listed above may vary over time. If you have any legal concerns or inquiries, LegaMart advocacy is there around the clock to help you out.