Foreign Investment in Iran Outlook of Iran Economy

Foreign Investment in Iran Outlook of Iran Economy, Law, Incentives Dr. Ahmad Jamali Director General for Foreign Investment Austria, Jul 2017 Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Outline ØPolicy for Attracting FDI ØO. I. E. T. A. I ØFISC ØFIPPA Procedure ØInvestment Incentives ØIran Bilateral Investment Treaties Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Policy of 6 th Development Plan Ø Economic priorities in foreign policy aimed at attracting knowledge and innovation and technologies from the related countries and development of export markets Ø To attract Global and regional reputable companies in the domestic production chain Ø Orientation and policies to promote transparency in the capital market and setting up the rating agencies to attract foreign investment and international finance Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

6 th Development Plan New Opportunities ØSetting up the Rating Agencies ØParticipation of Foreign Financial Institutions in Iran ØDevelopment of at least 54 Rural Business Clusters. Ø Operation and Construction of 98 Rural Industrial Area ØConstruction and Development of Competitiveness and Export Firms through Private and Cooperative Sectors ØWastewater Network ØPriority Investment in Mining and Mineral Industry Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Policy of FIPPA ØContribution to Economic Development in Industry, Mining, Agriculture and Services Ø Upgrading Technological & Management Skills Ø Improving Products with High Quality and Competitive in International Scale Ø Increasing Employment & Exports Ø Sharing Benefits and Risks on Equal Term without Discrimination Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Ministry of Economic Affairs & Finance OIETAI Foreign Investment Board Foreign Investment Dept. Loans, International Organizations & Institutions Dept. Foreign Economic Relation Dept. Foreign Investment Services Centre (FISC) Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir Financial & Foreign Loans Dept.

Ø Founded in June 1975. OIETAI Ø The main official authority for the Promote and Protection of Foreign Investment in Iran. Ø Investigation of all issues related to foreign investment such as: Ø Admission Ø Importation Ø Utilization Ø Repatriation Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Foreign Investment Services Center (FISC) Established at OIETAI with objectives of: Ø Facilitating all Issues related to the admission and activities of FDI Ø Facilitation of official procedures for required permissions and licenses Ø Coordination with Executing Agencies Related to Foreign Investment Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Offered by FISC Ø Guidance Ø General Supervision Projects Ø Necessary Coordination Ø The Declaration of Establishment Ø The Environment Protection License Ø Permits for Subscriptions Ø Registration of Joint Venture Company Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Members from Relevant Executing Agencies I. R. I Customs Administration Tax Organization Any Organization as per the case Central Bank of Iran Ministry of Foreign Affaires FISC Ministry of Labor Ministry of Agriculture Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) Ministry of Industry, Mine &Trade Office for Registration Companies & Industrial Property Department of Environment www. investiniran. ir

The Legislation ØThe Foreign Investment Promotion and Protection Act (FIPPA): o Substitutes Former LAPFI o Ratified in 2002 ØThe Corpus: o Implementing Regulations of the FIPPA Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Types of Investments Ø Direct Investment (Equity Participation) in All Areas Open to Iranian Private Sector in Greenfield & Brownfield Projects Ø Investment through Contractual Arrangements - Buy Back Arrangements - Civil Partnership - BOT Schemes Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Features of Investment under FIPPA No Limitation on: ØEquity Percentage, ØVolume of Investments, ØProfit Transfer, ØCapital Repatriation ØTypes of Capital Imported ØNo Import / Export Restriction Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Some other Features of FIPPA Ø Possibility of Investment by foreign Natural and Juridical Persons and Iranians Living Aboard Ø Equal Treatment towards Foreign Investors as accorded to Local Investors Ø Article 35 Services o 3 years Multi-entry Visa o 3 years Residence Permit o. Work Permit Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Non-Commercial Risks Covered By FIPPA Government Intervention and Breach of Contracts by Government Nationalization &Expropriation Currency Transfer Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Investment Licensing Procedure Submission Of Application Final License OIETAI Preparation And Submission Of a Report Max 5 Days Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) Foreign Draft License Board Communicated Investment Issued by Minister of Economic Affaires and Finance Max 10 Days www. investiniran. ir

Incentives and Benefits of Foreign Investment in Iran Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Incentives of 6 th Development Plan v. Accepting legal costs to construct, complete and Spaces, Places and development of sport as acceptable expenses tax. v. MOEAF should prepare Requirements to improve business environment in order to ensure security of investment and entrepreneurship in the country and reduce social risk of business environment. v. All duties, powers, structure and organization of the Free Zones and Special Economic transferred to the Ministry of Economic Affairs and Finance and Minister responsible for. v. Full support for the rights of Iranians living abroad and attraction of their participation in the development of the country. v. Requiring health insurance coverage foreigners residing in the country, including a group of refugees. Organization for Investment, Economic m. bahrami@investiniran. ir and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Energy, Industry, Mining of 6 th Development Plan v. Attracting private sector investment, to increase production capacity up to 100 million tons of new petrochemical products. v. Providing feed required for licensed manufacturing complexes, in coordination with the Ministry of Oil. v The Ministry of Energy is required to increase the efficiency and utilization factor of power plant through: v Issuance of preliminary permit for construction of power plants with efficiency of 55% to 60%. v. To determine Purchase price of power according to the market mechanism on the stock market. Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Tax Incentives ü Fixed corporate income tax at a flat rate of 25% Income Tax with Rate of 0. 0% Duration of Exemption Industry, Mining & Services (Hospital & Hotels) 5 Years Industry, Mining & Services (Hospital & Hotels) in Industrial Parks and Especial Economic Zones 7 Years Industry, Mining & Services (Hospital & Hotels) in Less Developed Areas 10 Years Industry, Mining & Services (Hospital & Hotels) in Less Developed Areas located at Industrial Parks and Especial Economic Zones 13 Years 100% of Income Derived Agricultural Activities Perpetual 100 % of Income Derived From Export of Services , Non-oil goods, Agricultural Products and 20% of Income Derived from Export of Non – Processed goods Perpetual Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

(Employment and JV) ØIn companies with more than 50 employees, in case of increasing the employment volume up to 50% in comparison to last year, one-year exemption can be added to the duration of exemptions (mentioned in previous slide). ØIn the case that foreign companies with reliable Brand produce goods using production capacity of Iranian companies and export at least 20% of total production, can enjoy 50% on Tax Rate for the income from sales of products (12. 5 % instead of 25%) after the end of above duration. Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Custom Exemption Ø Import of Production Line Machineries and Equipment Ø Import of Raw Materials used for Production of Export commodities ØEasy Circumstances & No Duty and Tax for Exportation of Products Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Investment Incentives in Free Zones Ø 7 free Zones in Iran Ø 20 Years Tax Exemption for All Economic Activities Ø No needed Visa for Entrance of Foreigners Ø Custom Exemption for Raw materials and Industrial machineries of Producing units Ø Possibility of Exporting Products to The Mainland Ø Easy Circumstances for Re-export and Transit of Commodities Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Industrial Parks and Areas provide the SMEs with: ØInfrastructures(water, electricity, communication wastewater treatment plants Øsoftware supports by the Technology and Business Service Centers (TBSCs), training, renovation of industries and so on in a unified and concentrated form. Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Investment Facilities in Industrial Parks ØNo need for different permissions from various agencies and organizations ØBe exempted from the municipalities ØFree of Charge services to take the construction permit and finish license ØReduced investment costs due to the organized common services ØRent/ purchase of ready-built Sites in order to accelerate the Project exploitation ØPayment of exploitation costs by cash and installment Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Special Economic Zones Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Iran Bilateral Investment Treaties ØIran has signed its first Bilateral Investment Treaty with Germany in 1965, second BIT signed in the World. ØSince 1995, The Organization for Investment, Economic& Technical Assistance of Iran(O. I. E. T. A. I) has Negotiated & Signed 68 BITs with Different Countries from all over the World. ØIran has Concluded BIT with Many Capital Exporting Countries such as: Austria(2001), China(2000), France(2003), Germany(2002), Italy(1999), Japan(2016), Sout h. Korea(1998), Singapore(2016), Spain(2002), Sweden(2005)Switzerland(1998) Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

International Treaties ØBilateral Investment Treaties (BIT) o BIT with 68 countries o Austria - Iran, Islamic Republic of BIT (2001) ØDouble Taxation Treaty (DTT) o DTT with 42 Countries o DTT with Germany has also been concluded Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Statistics On Foreign Investment by Austrian in Iran Number of Amount of Approved Capital Amount of Inward FDI Sector Project (FDI) (million $) Energy 1 12 0 Services Industry 1 8 6 361 6 44 Total 10 379 50 Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir

Thank you Foreign Investment Office Tel: +98 21 33967755 – 33967075 Fax: +98 21 33967864 Foreign Investment Services Center Tel: +98 21 33967749 – 33967766 Fax: +98 21 33967774 Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) www. investiniran. ir