Free trade zones
The New rules and regulations recently passed on the Free Trade Zones are as follows:
1. Government guarantees the investments
2. Private and International Banks and Insurance's activities have been permitted
3. Foreign exchanges are free in the area
Purpose:
Provide good conditions and atmospheres for Dialogue between foreign investors and Iranian authorities
Understand the potential and ability of the planes in the Free Trade Zone in Iran.
Introduction:
The Islamic Republic of Iran began to implement the first five-year economic plan aimed at the reconstruction and economic recovery in 1989, after the end of the eight-year Iraqi imposed war. The main objective of this plan was to transform the managed economy of the war to an open economy based on market forces and establishes and maintains relations with the world economy.
Due to the existing limitation for the application of the market economy, concern for the side effects of such a sharp transformation on the social well-being of the society it was decided to assign some locations and establish free or special economic zones in order to completely apply the principle of a free market economy. This way, enough attraction incentives could be introduced for absorbing foreign investment.
According to the legally accepted definition, the free trade zones and special economic zones are those parts of the Iranian territory that are managed according to the special laws and bylaws and are excluded from the laws of the governing motherland. These zones are excluded from the domain of the custom authorities and enjoy the full freedom for the in and out flow of goods and commodities. Unique geographical locations, sufficiently developed infrastructure and the foreign investment incentives have provided ample opportunity for internal as well as foreign investment in the zones.
The Iranian Parliament approved the Free Zones Act in September of 1993. According to this act, Kish Island, Qeshm Island and the Port of Chabahar were declared as the Free Zones of Iran. The council of ministers later adapted the bylaws of the free zones. These bylaws have defined and set out all regulations pertaining to import, export, investment, insurance, banking, labor, and employment of these zones.
Salient Features:
- Joint venture with no limit on investment and shareholding;
- Proper employment regulations;
- 15 years of tax exemption;
- Foreign investments up to any ratio (of capital investment);
- Investment guarantee from any viewpoint;
- National and international banking facilities;
- Offshore banking and non-banking credit practices;
- No currency restrictions;
- 100% repatriation of capital and profit;
- Abundant sources of energy;
- Vast pool of manpower at all levels of skills and various trades;
- No bureaucratic regulations and avoidance from red tape;
- Tourism attractions;
- No entry visa requirement for foreign nationals;
ADMINISTRATION
1. Iran's Free Zones are supervised by a council consisting of 14 ministers and high-ranking officials under the chairmanship of the President of the Islamic Republic of Iran.
2. The Council has a Secretariat, which coordinates the affairs of the zones. The President of the Islamic Republic of Iran appoints the Secretary of the Council.
3. Each Zone is administered by an Organization, which is formed in accordance with the Iran's Commercial Code, having an independent juridical personality;
4. Those Organizations as well as their affiliated companies, are exempt from laws and regulations normally imposed on government owned companies;
5. The head of each Zone is the Chairman, and Managing Director of the Zone Organization, appointed by the President of the Islamic Republic of Iran from the members of the Board of Directors and suggested by the members of the Council;
6. All governmental bodies and their local executives shall coordinate their activities in the Free Zones under the supervision of each Free Zone Authority.
GEOGRAPHICAL ADVANTAGES
1. All three of Iran's Free Trade -Industrial Zones:
2. Are located at the southern coasts of the country and connected to the major international waterways via the Persian Gulf, the Oman Sea and the Indian Ocean;
3. Have easy access to major air, sea and land transportation routes at the local, regional, and international levels;
4. Are in proximity to regional markets with regard to import of raw materials, and intermediate or manufactured goods, and easy access to local and neighboring markets specially those of Western, Southern and Central Asia and the Persian Gulf;
5. Have reliable Public utilities and services;
6. Have availability to skilled and semi- skilled manpower with reasonable (competitive) wage demands in the region;
7. Have appropriate access to abundant sources of energy such as natural gas (2nd in the world) and crude oil 4th in the world;
8. Have wealth of mineral resources, unique in the Middle East, required for industrial production and exports;
9. Have international reputation as major trade centers;
10. Have appropriate climate and tourist attractions.
INCENTIVES:
1. Investment
2. Investment independently or in partnership with Iranian persons;
3. No restrictions on the percentage of the share holdings;
4. Free repatriation of net profits and capital;
5. Exemption from all kinds of taxes for the first 15 years;
6. The legal rights of foreign investors are guaranteed; in the event of nationalization, the Authority of each Zone shall make the compensation;
7. Foreign investors may lease land with reasonable rents, and own the buildings and other installations built on the land
Imports and Exports:
1. All goods imported into the Zones are exempt from customs duties and commercial benefit tax;
2. Exports of goods from the Zones to the mainland, to the extent of the added value plus the value of the used
domestic raw materials, are exempt from customs duties and commercial benefit tax;
3. All goods, shipped to the Zones from the mainland, are deemed domestic transference.
4. No entry visa requirement
5. Foreign nationals who choose direct entry to the Zones do not need to apply for visa in advance;
6. For entry into adjacent zones, a double entry visa can be obtained from the Embassies or Consulates of the
I.R.Iran in any country from which they wish to apply.
Banking Facilities:
1. The offshore banking and non-banking credit activities regulations in the Zones are flexible, and compatible
with international offshore banking practices and standards;
2. Foreign banks and financial institutions may open head offices, branches, and counters independently or in
partnership with domestic partners;
3. No foreign exchange control; the conversion of the Iranian Rial to any other currency is readily permitted;
4. Transfer of foreign currencies and Iranian Rials abroad are permitted.
Return to: