Doing Business in Iran

Contents

Successive administrations in Iran have continued to follow market reform plans and had the aim of diversifying Iran's oil-reliant economy. Iran has other advanced industries in the areas of nanotechnology, biotechnological innovations and pharmaceuticals. The strength of its oil market helped ease financial pressures on Iran and allowed for Tehran's timely debt service payments since 1996.

The early years of the new millennium saw Iran's service sector contributing the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. In 2006, about 45 percent of the government's budgetary resources came from oil and natural gas revenues, and 31 percent came from taxes and fees.

Opening a Business in Iran

The following legal requirements need to be complied with, in order to start a business in Iran:

  1. Deposit at least 35 percent of the subscribed shares in a bank account and obtain a certificate from the bank. This will take one day and no fee is charged.
  2. Then, register the company with the Companies Registration Office (for companies) and pay registration duties. This can be done in 3 days. It will cost IRR 375,000 for registration and IRR 40,000 for searching the name and reserve it.
  3. Then, the company representative must place a notice of the company formation in the Official Gazette and in the selected newspaper of general circulation. This will take 1 day. Cost on placing the notice is IRR 140,000 for official Gazette and IRR 240,000 for general circulation newspaper.
  4. Afterwards, take out the officially sealed books of account within 30 days after the date of registration. This will take 1 day. Costs will be IRR 100,000.
  5. Pay the stamp duty for the share certificate, within 60 days after the date of registration of the company. It will take 1 day. The costs involved will be equal to 0.2 percent of the par value of the subscribed share capital.
  6. Finally, enroll workers in the social security programme by opening files for all the employees, before the Iranian Labor Department and obtain a workplace number. This will take one day and no charge is needed to be paid.

Business Laws in Iran

Iran Trade Laws

Iran Insurance Laws

Iran Banking Laws

Iran Laws on Foreign Investment

Iran Criminal Law

  • Iran Discretionary Punishment Law

  • Iran Retribution Law

  • Four Islamic Penal Codes known as qesas, ta‚Äôzirat, hodoud and diyat.

Iran Civil Law

Work Culture in Iran

Iran being an Islamic Republic, its society manifests local customs and standards of behaviour which differ greatly from those of Western world. These Islamic standards are to be followed not only to ensure acceptability in a different environment but also because they are legally enforceable here. Non-observance can result in criminal charges being filed.

Iranians are usually very formal in their approach to transacting business and it will take several meetings or get-togethers before a more personal relationship can be ensured. This is the way to go when it comes to the Iranian government officials, managers of state- controlled companies and foundations. Negotiations will be long, detailed and protracted affairs.

Tenders are mandatory for government contracts related to purchases or execution of projects. However. these are rarely competitive. Dividing the contracts into several sub-contracts is a common practice to try and incorporate local capability and also to negotiate on specific prices. It is recommended to maintain a 'package' approach.

Business Barriers in Iran

The most problematic factors for doing business in Iran, as identifed through a survey for the Global Competitiveness Report 2011-2012 by the World Economic Forum, are (with percentage responses of business executives in brackets): Access to financing (19.4 percent), Policy instability (13.7 percent), Inflation (11.1) , Inefficient government bureaucracy (10.6), Inadequate supply of infrastructure (9.9) , Restrictive labor regulations (7.0), Foreign currency regulations (5.8), Inadequately educated workforce (4.5).

  • Foreign direct investment (FDI) in Iran has been restricted by adverse or complex operating norms and by international sanctions. This, despite the Iranian government liberalizing investment regulations in the early 2000s.
  • Iran ranks 62nd out of 142 national economies covered by the Global Competitiveness Report 2011-2012 published by the World Economic Forum. In 2010, Iran ranked sixth in attracting foreign investments globally.
  • Foreign investors over the years have focused only on a handful of sectors: the oil and gas industries, manufacture of motor vehicles, copper mining, petrochemicals, food products and pharmaceuticals.
  • Iran absorbed $ 24.3 billion of foreign investment from 1993 to 2007 and as per another estimate, $34.6 billion for 485 projects between 1992 and 2009. Iran is categorized as Upper middle-income economy by the World Bank.
  • Iran managed a rank of 144 among 183 countries, in the Ease of Doing Business 2012 survey commissioned by the World Bank. Iran's rank in Doing Business survey 2011 was 144.
It takes six procedures which require eight days, to start a business in Iran according to the latest Doing Business survey.