Foreign Capital

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58.What are the types of foreign capital?
According to FIPPA, there are various types of foreign capital which, in addition to cash capital, includes all types of non-cash capital comprising of machinery, equipments, parts, raw material, know-how and expertise services. (For more information please see Article(2) of the Implementing Regulation of FIPPA).
59.Are all kinds of foreign exchange acceptable as cash capital?
In fact, those kinds of foreign exchange which are acceptable to the Central Bank of the Islamic Republic of Iran, could be registered as cash capital.
60.How foreign cash capital is imported into the Country?
Foreign cash capital shall have to be imported into the Country through banking system and/or the official channels acceptable to the Central Bank of the Islamic Republic of Iran. Evidently, the imported foreign exchange shall be among those currencies acceptable to the said Bank.
61.Is it obligatory to convert the imported foreign exchange into Rials?
That portion of imported foreign exchange required to be converted into Rials at the discretion of the investor, shall be purchased by the recipient bank at the current rate, and its equivalent in Rials shall be deposited in the account of the J.V.C. or the investee firm.
62.Is it possible for the foreign investor not to convert the imported foreign exchange into Rials but use it for foreign purchases and orders related to the investment project?
Yes, as the foreign exchange may be converted into Rials, it is also possible to deposit the same in the foreign exchange account of the J.V.C. or the investee firm to be used, under the supervision of the Organization, for payments related to foreign orders and/or other necessary expenses of the investment project. Depositing foreign exchange without conversion into Rials protects the foreign investor against foreign exchange fluctuations, and provides the opportunity to use it at his own discretion, whenever required.
63.What is the applicable rate for the conversion of the foreign exchange imported into the Country?
The rate applicable for the conversion of cash funds imported by the foreign investors is the prevailing rate of the Country’s official monetary network or the free (market) rate as acknowledged by the Central Bank of Iran.
64.Is it necessary to valuate the foreign imported capital before its registration?
Yes. Valuation of capital, whether in cash or kind, is necessary. In both cases, the bank’s conversion rate on the date of importation shall be the basis for valuation.
65.What formalities are required for importation of machinery, equipments, parts and raw materials (i.e., non-cash capital)?
In principal, importation of non-cash capital items related to foreign investment projects are not subject to the formalities of importation of commercial commodities. Non cash items of any type can be imported into the Country upon recommendation by OIETAI based on the approved list, and the statistical (order) registration with the Ministry of Commerce.
66.Does it mean that importation of non-cash capital is free from local content requirements, allocation of foreign exchange and opening letter of credit?
That is true. It is not necessary to comply with the local content requirement, allocation of foreign exchange and opening letter of credit.
67.Is there any charge applicable to importation of foreign non-cash (in-kind) capital?
Except for machinery applicable in manufacturing and mining projects, foreign non-cash capital, the same as other goods, is subject to payment of import duties,
68.What criteria are to be considered for importation of know-how?
Technical know-how and specialized services are considered as acceptable types of foreign capital, so should be valuated and registered then as foreign capital. However, the opinion of the relevant Ministry shall be sought before the importation of technical know-how.
69.Is it permissible to pay license fee or royalty?
Sure. In cases where technical know-how is not considered as part of foreign capital, the relevant sums and/or approved royalty are payable to technology supplier.
70.What criterion is set for payment of license fee or royalty to foreign parties?
In any and all manners of payment, the value of imported raw material shall be the basis for calculation of royalty and or license fee. This net amount, after deduction of imported materials value, shall be paid to whom granted the license. In other words, according to prevailing policy, payment of royalty and license fee is calculated on the basis of domestic added value.
71.Is it possible to register patent right and trade mark in Iran?
According to Patent and Trade Marks Registration Law, industrial and intellectual property rights such as patent rights, trade marks and names, etc. can be registered and protected in Iran.
72.Is it necessary to provide the list of non-cash capital before importation of the same?
Yes. Prior to importation of non cash capital, the foreign investor is required to submit to the OIETAI the detailed list of the same comprising technical specifications, manufacturer(s)’ name, year of manufacture and price, along with relevant catalogues. Upon confirmation of the list, the said non-cash capital can be imported into the Country in one or more shipments at the discretion of the investor without any other specific formalities.
73.Is a prior review of technical know-how necessary?
Agreements related to specialized services, to be imported in the from of capital or to be paid for in other ways, shall be submitted to OIETAI along with the foreign investment application. The Organization will then coordinate and consult with the relevant Ministry on the necessity of the know-how as well as its value.
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