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Trade Law and Policy

Every aspect of Business Law is important in economic growth. Success in trade depends on strategy and policy. In this policy, every legal rule plays a role. This statement is not only about running a successful business. It is also about government and its role in economic growth.

In every country, there are laws and regulations about trade. These laws regulate every aspects of business. A single business must pay attention to these rules. Despite of its very old system of business in most parts, Iran is going forward to achieve a high economic growth. As it is correct in every country in the world, foreign trade plays a key role here too. See Iran Economic Growth.

Due to recent adjustment program in Iran, the whole system of Iran economy both in macro and micro area experienced great changes. In post-sanctions era, Iran aimed to achieve high level of economic growth and development. In “sixth economic, social and cultural program” Act, these goals get more clarified through step by step action. See Iran Development Goals.

In this era, Iran economy is getting more open to foreign investment. Foreign nationals can establish a company in Iran without any limitation. Also the government has a mission to attract foreign investment. See Iran Development Goals.

Despite of Facilities for  foreign investors and foreign traders that emerged in Iran trade policy, still it is important to know the roles about how to trade with Iranian partners.

1- Methods of Business

Before economic adjustment program foreign direct investment has a limitation. A foreign investor had to participate with an Iranian national but today a foreign investor can invest his or her property 100% by its own name. It is no longer necessary to participate with an Iranian national. This change happened in 2010.

If a foreigner wants to work in Iran, there are three different ways: A- As an individual B- As an Iranian company C- As a foreign company.

A- As an Individual

Working and Visa regulations for individuals:

  • Iran Labor Code, Sec. 120: Foreign citizens shall not be employed to work in Iran unless they have an entry visa specifically entitling them to work and have obtained a work permit in accordance with the relevant statutory regulations.

  • Note. The following foreign citizens are not subject to the provisions of section 120:

    • Foreign citizens exclusively employed by diplomatic and consular missions, subject to confirmation by the Ministry of Foreign Affairs;

    • The personnel and experts of the United Nations and its specialized agencies, subject to confirmation by the Ministry of Foreign Affairs;

    • The correspondents of foreign news agencies and press, subject to reciprocity and confirmation by the Ministry of Culture and Islamic Guidance.

  • Iran Labor Code, Sec. 121. The Ministry of Labor and Social Affairs shall issue a visa authorizing the bearer to work, together with a work permit, provided that:

    • According to the information available to the Ministry of Labor and Social Affairs, there are no qualified Iranian citizens with similar specialization who are ready to perform the work in question;

    • The foreign citizen possesses sufficient skills and specialization for the job in question;

    • The expertise of the foreign citizen is used to train Iranians with a view to the eventual substitution of the foreign citizen by a trained Iranian.

  • Iran Labor Code, Sec. 124. In accordance with the provisions of this Code, a work permit shall be issued or extended or renewed for a maximum period of one year.

  • Iran Labor Code, Sec. 128. Prior to signing any contract likely to entail the employment of foreign experts, an employer shall apply to the Ministry of Labor and Social Affairs for authorization to employ foreign citizens.

  • Labour Code. Dated 20 November 1990. See ILO website.

B- As an Iranian company

Before 2010, there were two ways for foreigners to establish a company in Iran:

  1. Companies with Iranian partner: Any company registered in Iran shall have Iranian partners owning 51 percent of company’s capital.

  2. Companies without Iranian partner: only if there is an investment contract between a foreigner or a foreign company and a governmental organization, the foreigner of foreign company can establish a company in Iran without Iranian partner. (i.e. 100 percent of company’s capital belongs to foreign nationals)

From 2010 by ratification of a regulation above mentioned requirements eliminated. It is no longer necessary to have an Iranian partner or an investment contract. See Basic Type of Companies in Iran Law and Iran Company Law (part one)

C- As a foreign company

Foreign companies can establish branch in Iran for one or more of following activities:

  1. After sale services for principal company.

  2. Applying the executive phase of contracts concluded between Iran nationals and principal company.

  3. Contextualizing of investment in Iran on behalf of principal company.

  4. Enhancing non-oil exports in Iran.

  5. Cooperating with Iranian companies in order to work in third countries.

  6. Technical and engineering services and transfer of technology

  7. Perform any other business activities which require governmental permission such as transportation, insurance industry, marketing, and etcetera”.

There are also special Facilities for Free Trade Zones. See Financial Institutions in Free Trade Zone.

2- Type of Business

Investment, import and export, sale, and financial services are the most common types of business with Iran.

Investment in private sector has different rules from public sector both in concluding the contract and dispute settlement procedure. Regarded to recent changes in Iran’s economy, the scope of private sectors has been expanded to all economic sectors other than those are specifically mentioned as the public sector.

When we talk about private sector and its differences with public sector, we are just referring to the economic activities not activators. In the other words, public sector is that sector in which only public entities can act but private sector are those sectors that both private and public entities can act in it.

Foreign investors are private sector so they can invest in any economic sector that Iranian individual and Iranian private companies can invest. Foreign investment in this area can take place into two types: one- participation with an Iranian company and two- independently.

Because of this fact that public companies also can invest and act in private sector it worth to remember that when you participate with an Iranian company, you should recognize that this company you supply is a private company or a public company because in dispute settlement they have very different rules.

Today almost every sector is open to foreign investment like mining, agriculture, transportation, and many more. See Iran Development Goals.

For information about investment in stock market see Investment in stock market part one two three.

Import and export is almost the most changing business area. We will explain its rules in other articles. If you are a manufacturer, producer, or an exporter pay attention to the new regulation about Dumping. See Antidumping Regulation part one two three.

Startup companies are among emerging businesses. Iran is developing a good strategy about startups. If you are thinking about a startup business in Iran see Startups in Iran Legal System and Protection of Computer Software.

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