A Primary for International Investors - vbw · A Primary for International Investors Presents by:...

A Primary for International Investors

WWW.HOWTOINVESTINIRAN.COM

Presentsby:Behzad Golkar

www.howtoinvestiniran.com

§ Awelldiversifiedeconomy

§ Astableregioninaregionofinstability

§ Alonghistoryofeconomicgrowth

§ Developmentofinternationalrelations

§ FIPPA

Iran


GDP

• IranisthesecondlargesteconomyintheMiddleeastandMENAregion• EstimatedgrossdomesticproductofUSD425bn in2014

219258

337

397 398

467

592 587

511

425

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GDPUSDBillionDollar


6.299,0

7.874,0 7.710,0

6.631,0

5.442,0

2010 2011 2012 2013 2014

IranGDPpercapita($)

GDPperCapita


Gini Index


PortsandEconomicFreeZones


§ MainImportitems:Rice,soybeanoil,livestockcorn,vehicleparts,andwheat

§ Mainexportitems:Hematiteironore,liquidpropane,oiltar,liquidgas,petrochemicalproductsandotherindustrial,agricultural,mineralproductsaswellasrugs,handicraft,fruitsandnuts

ImportandExport


2015 2016 2017 2018 2019

GDP-CurrentPrices(USDbn) 417 432 450 470 491

GDP-PerCapita(USD) 5,283 5,401 5,556 5,727 5,906

GDPbasedonpurchasing-power-paritypercapita(USD)

16,918 17,396 17,922 18,467 19,022

GrossNationalSavings(PercentofGDP)

%43 %41 %40 %39 %37

IMFForcasts


354.000

460.000

594.000

782.000 816.000

2011 2012 2013 2014 2015

Liquidity(billionRials)

• TradableBonds:100,000BillionRials(USD3.3bn)

• Effectiverate(compoundrate):20%

MoneyMarket


Comparisonofinflation,annualinterestrateandbond(Sukuk)rateinrecentyears

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

40,0%

2007 2008 2009 2010 2011 2012 2013 2014 2015

BondRate

InterestRate

Inflation

Inflation,InterestRateandBondRate


3,14

1,652,01 1,91

3,05

3,654,15

4,87

3,04

1,9 2,1

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

IranForeignDirectInvestment(USDBillionDollar)

ForeignDirectInvestment


• Localbankaccountisneeded.

• Documentsrequired toopenabankaccountforlegalpersons:a. Representative ofthecompanytotravel toIranb. Articleofassociation&prospectusofthecompany(inEnglish)c. authorizedsignaturesofthecompanyd. AttestationofIran`sembassyincountrywherecompanyishosted

Howtobegin


Organization for Investment and Technical Assistance of Iran (OIETAI)


OIETAI

• Founded in June 1975

• The main official authority to promoteand protection of Foreign Investment

• Investigation of all issues related toforeign investment such as:

o Admissiono Importationo Utilizationo Repatriation


Foreign Investment Services Center (FISC)

Facilitate Admission Procedure and relevant activities of FDI

Facilitate Official procedures for required permissions and licenses

Coordination for entry visa, residence and employment permits

Coordination with Executive Agencies Related to ForeignInvestment

Coordination in registration of JV company, import machinery andequipment, repatriation of capital, customs and tax affairs ,etc.

services are not limited to prior-investment stages; foreign investors may, atany time and any stage ever after, refer to FISC and benefit from its services.


FISC Members from Relevant Executing Agencies

FISC

I.R.I CustomsAdministration

Ministry ofForeign Affaires

Ministry ofLabor

Ministry ofagriculture

TaxOrganization

Ministry ofIndustry, Mine

&Trade

Any Organizationas per the case

Central Bankof Iran

Office for registration

Companies & IndustrialProperty

Department ofEnvironment


Foreign Investment

Promotion and Protection Act(FIPPA)


Ø Thelawprotectingforeign investmentinIranistheForeignInvestmentPromotionandProtectionActratifiedin2002whichishereinafterreferred toasFIPPA.

Ø TheOrganizationforInvestmentEconomicandTechnicalAssistanceofIran(OIETAI) isthesolegovernmentauthoritywhichinaccordancewithFIPPAislegallyempowered toadmitandextend legalprotectionstoforeigncapital.

Ø Allforeigninvestorsarepermittedtoinvest, forthepurposeofdevelopmentandproducingactivities,inallareasofindustry,mining,agricultureandservices.

WhatisFIPPA


• There isnorestriction forforeigninvestment inlistedcompaniesinTehranStockMarket

• FundamentalRightsRecognizedunderFIPPA- Transferring Profits,CapitalandGainsonCapital- ReceiveCompensation fromExpropriationandNationalizationofForeign

Capital- ReceiveCompensationResultingfromthePassingofLawsorCabinet

DecreesCausingProhibition- EnjoyEquitableTreatmentAccordedtoDomesticInvestors

• AllSectorsareopentoforeigninvestment

BenefitsofFIPPA


FIPPA: Types of Investments

v Direct InvestmentEquity Participation:in All Areas Open to Iranian Private Sector

v Investment through Contractual ArrangementsNon-Equity Forms:o Buy Back Arrangementso Civil Partnership o BOT Schemes


Risks Covered By FIPPA

AllN

on-Com

mercia

lRisks

Money Transfer

Nationalization & Expropriation

Government Intervention andBreach of Contracts byGovernment


Some Other Features of FIPPA

• No Limit on

• Other Services

EquityPercentage

VolumeofInvestments

ImportofForeignCapital,beingcashornon-cash(anykind)

CapitalRepatriation

TypesofCapitalImported

3yearsMulti-entryVisa

3yearsResidencePermit

WorkPermit


q Bring about Economic Growth, Upgrade Technology, enhance the Quality of Product,increaseEmploymentandExport

q Investigation and decision making on applications is done by ForeignInvestment Board under the chairmanship of Vice Minister of Economic Affairs &Finance

q Assignment of whole or a part of the foreign Capital to a local and/or toanotherForeign InvestorisPermitted

q Foreign Capital may be imported by way of one of combination of thefollowings:

– Cash Fund to be converted into Rials– Cash Funds not to be converted for the purpose of Purchases– Non Cash Items

General Condition for Admission for Foreign Capital


Final license issued by Minister of Economic

Affaires and Finance

Investment Licensing Procedure

SubmissionOf

Application

OIETAIPreparation

AndSubmissionOf a Report

ForeignInvestment

Board forReview

Draft license communicated

Request forReconsideration

Request forReconsideration

Max 5 Days Max 10 Days


1. Application Form

2. Establishment License / Primary Agreement / Preliminary agreement of thepertinent Iranian organization

3. Official letter of the foreign investor to submit to the OIETAl

4. The Foreign Investors background including a brief history of the company , activities(In case of foreign investor is a natural person , a photocopy of passport and resume willbe provided).

5. A list of machinery, equipment and CKD part which may be imported into thecountry as a part of the foreign investors capital

6. For technical know-how, a draft of the contract outlining the conditions of thetransfer of technology.

Required Documents for Foreign Investment License


Iranian Taxation System


• All real or legal owners, for their properties inside Iran

• Any real person residing in Iran for the incomes earned inside and outside the country

• Any Iranian real person residing abroad for all the income hemakes in Iran Any Iranian legal entity for the incomes earned inside or outside the country

• Any non-Iranian real or legal entities for the income earned inIran and also for the income gained through delegation of authority, dealership, technical and educational assistance or movie contracts (for any sort of income earned as rental, right of display and the like) in the territory of Iran

Taxable Real and Legal Entities According to Direct Taxation law


Rate Subject

25% ThetotalincomeofcompaniesaswellastheincomegainedthroughdifferentsourcesbylegalentitieslivingabroadorinsideIran

25% TheIraniannoncommerciallegalentitieswhichhaveengagedinprofit-makingoperations,whiletheyareinitiallynotestablishedtodoso

25% Thenon-Iranianlegalpersonsandentities livingabroad

Rate Subject

2% TheforeigninsurancecompanieswhichreinsureIranianinsurancecompanies

5% ThetaximposedonforeignairlinesandshippingcompaniesinvolvedincarryingpassengersandfreightfromIran

Exemption

CorporateTaxIncome

Exemptions Rateofexemption

Duration

TheincomemadebymanufacturingandminingunitswhoseoperationlicenseshavebeenissuedafterApril27,1992andarelocatedoutsidearadiusof120kmeither fromthecityofTehran,or50kmfromthecityofIsfahanor30kmfromthecitieshavingapopulationof300,000andmore

80% 4years

Theproductionunitslocateddeprivedareas 100% 10yearsTheincomemadethroughexportsofindustrialfinishedproducts 100% perpetualTheincomemadethroughexportsofallproductsalreadylistedasthosewhicharelegal tobeimported

50% perpetual

AllbusinessactivitiesintheIraniantradezonesareexempt fromincomeandpropertytax 100% 20years

Theexportsofnon-oilcommoditiesandservice,withanexceptionoftherawmaterialandgoodswhichhavelowvalue-added

100% Until2016

Theinterestofferedbybanksandothercreditinstitutionstofixeddeposits,savingsorcurrentaccounts

100% perpetual

Theinterestpaidforgovernmentandtreasurybonds 100% perpetualTheinterestofferedbyforeignbankswhichreceive loanshavefixeddepositsinIranianbanks

100% perpetual

Theinterestofferedonlandreformbonds 100% perpetualThemoneypaidbytheNationalDevelopmentFund 100% perpetualTheincomegeneratedbytheagricultureandhorticulturesector 100% perpetualTheincomeearnedthroughswappinggoodsthroughIran 100% perpetual


Highlights of Tax Holidays

Fixed corporate income tax at a flat rate of 25%

Activity LevelofExemption DurationofExemption

Industry&mining 80% 4years

Industry&MininginlessdevelopedArea 100% 20years

Agriculture 100% Perpetual

Tourism 50% Perpetual

ExportofServices&non-oilgoods 100% During5th DevelopmentPlan

SalaryinLessDevelopedArea 50% Perpetual

ProfitusedtoDevelopmentofExistingunitesorSettingupNewUnites

50% Perpetual


New Tax Incentives enforceable from March 2016

Income Tax with Rate of 0.0% Duration of Exemption

Industry, Mining & Services (Hospital & Hotels) 5 Years

Industry, Mining & Services (Hospital & Hotels) in IndustrialParks and Economic Especial Zones

Industry, Mining & Services (Hospital & Hotels) in LessDeveloped Areas

7 Years

10 Years

Industry, Mining & Services (Hospital & Hotels) in LessDeveloped Areas located at Industrial Parks and Economic 13 YearsEspecial Zones

In companies with more than 50 employees, in case of increasing the employment volume up to 50% in comparison to lastyear, one-year exemption can be added to the above duration.

In the case that foreign companies with reliable Brand produce goods in Iran andexport 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.


• Fixed0.5%taxrateontransferofshares instockexchange

• Taxexemptiononinterest received fromfixed-income instruments

• Absenceofdoubletaxationasthere isnotaxondividends received

• ForeigncompanieswhousetheIranianmanufacturingcapacitytoexportatleast20%oftheproductswitharespectablebrandcanenjoythezerotaxrateduringthisperiodanda50%reductionontaxpayableaftertheperiod

Other Tax Provisions


Value-Added Tax Act (VATA) in Iran

q Currently, the VAT rate stands at 9%

q Economic activities in free trade and industrialzones are exempted from value-added tax.


Value-Added Tax Act (VATA) in Iran

• TaxableEntitiesAllentitiesinvolvedinsupplyofgoodsandservices andintradeactivitiesaresubjecttotheprovisionsoftheVATLaw.

• TaxableTransactionsInIran,alltransactionsinvolvedinthesupplyofgoodsandservicesorintheimportactivitiesaresubjecttotheprovisionsoftheVATLaw.

• RateVATrateinIranis9%for1395(March21,2016– March19,2017).


Custom Exemption for Foreign Investors

Production Line

Machineries and

Equipment (First-HandMachineries)

Raw Materials used forProduction of Export

commodities


International Treaties, Promotion and Supports


International legal infrastructure, affiliations and relations

Treaty

Membership

Cooperation

•Bilateral Investment Treaties (BIT) with 53 Countries •Regional & Multilateral Treaties with Member states of Organization of Islamic Cooperation (OIC) & Economic Cooperation Organization (ECO)•Double Taxation Treaty (DTT) with 44 countries

•Multilateral Investment Guarantee Agency (MIGA)World Association of Investment Promotion Agencies (WAIPA)

•FIAS: Assessment of Investment Environment in Iran •UNIDO: Capacity Building in Industrial Investment Promotion •UNCTAD: Preparation and Launch of World Investment Report (WIR) and other Surveys


NATIONAL DEVELOPMENT FUND of IRAN (NDFI)

• The National Development Fund of Iran is purposed to allocate 20% of national Oil &Gas revenues to help spur economic development and production.

• The National Development Fund will allocate its resources to investment projects atLIBOR +%3-%5 .

• Provision of facilities out of the National Development Fund to the private, cooperativeand public nongovernmental sectors

• Aimed at production and development of investment domestically and internationally,considering the competitive conditions and proper economic output

• Provide financial facilities for joint ventures and mutual projects of domestic andinternational investors (eligibility mandates that minimum 30% stake should be raisedby the foreign party)

Thank you

http://www.howtoinvestiniran.com

http://www.investiniran.ir/en/home

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