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Iran
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Iran with efficiency and assurance.
WHY IRAN?
Iran, officially the Islamic Republic of Iran and also known as Persia, is a country in West Asia. It borders Iraq to the west, Turkey, Azerbaijan, and Armenia to the northwest, the Caspian Sea to the north, Turkmenistan to the northeast, Afghanistan to the east, Pakistan to the southeast, and the Gulf of Oman and the Persian Gulf to the south. With a population of over 90 million, Iran ranks 17th globally in both geographic size and population and is the sixth-largest country in Asia. Iran is divided into five regions with 31 provinces. Tehran is the nation’s capital, largest city, and financial centre.
As of 2024, Iran has the world’s 19th largest economy (by PPP). It is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures. Services contribute the largest percentage of GDP, followed by industry (mining and manufacturing) and agriculture. The economy is characterised by its hydrocarbon sector, manufacturing and financial services. With 10% of the world’s oil reserves and 15% of gas reserves, Iran is an energy superpower. Over 40 industries are directly involved in the Tehran Stock Exchange. Tehran is the economic powerhouse of Iran. About 30% of Iran’s public-sector workforce and 45% of its large industrial firms are located there, and half those firms’ employees work for government. The Central Bank of Iran is responsible for developing and maintaining the currency: the Iranian rial.
ADVANTAGES
Robust Legal Protections (FIPPA)
- The Foreign Investment Promotion and Protection Act (FIPPA) provide significant guarantees for international businesses:
- Ownership: Allows for 100% foreign share ownership in most sectors.
- Profit Repatriation: Guarantees the right to transfer capital, dividends, and profits out of Iran in foreign currency.
- Security: Provides legal protection against nationalization and expropriation, with guaranteed compensation at real market value.
- Equal Treatment: Ensures foreign investors receive the same treatment and privileges as domestic Iranian investors.
- Trade Hub: It acts as a focal point for the North-South and East-West corridors, connecting Russia to the Persian Gulf and Europe to China.
- Regional Access: Business operations in Iran provide proximity to a combined market of over 400–600 million people in neighbouring countries.
- Maritime Access: Extensive coastlines on the Persian Gulf, Oman Sea, and Caspian Sea facilitate global shipping routes.
- Energy Superpower: Ranks 2nd globally in natural gas reserves and among the top producers of crude oil.
- Mineral Wealth: Home to 68 types of minerals, including top-tier global rankings in zinc, lead, copper, and iron ore.
- Operational Savings: Low utility costs (electricity and water) and affordable labor provide a competitive edge for manufacturing and heavy industry.
- Demographics: A population of over 90 million (as of 2026 projections), with approximately 60% under the age of 30, creates a large, tech-savvy consumer base.
- Education: One of the most educated workforces in the Middle East, particularly in STEM fields; Iran has the third-largest number of engineers per capita globally.
- Digital Adoption: High mobile phone and smartphone penetration (over 78%) facilitates rapid growth in e-commerce and fintech.
- Free Trade Zones (FTZs): Operations in zones like Kish or Qeshm offer 20-year tax exemptions on all economic activities, no visa requirements for foreigners, and duty-free import of raw materials.
- Sector-Specific Exemptions:
- Agriculture: 100% tax exemption with no time limit.
- Exports: 100% exemption on income derived from the export of services and non-oil goods.
TAX REGIME
Corporate Income Tax
- Standard Rate: A flat rate of 25% applies to the aggregate income of legal entities.
- Stock Exchange Listed Companies: A reduced rate of 22.5% is available for companies listed on the Tehran Stock Exchange or the Commodity Exchange.
- Foreign Branches: Branches of foreign companies are taxed at the same flat rate of 25% on profits derived from Iranian operations.
Individual & Salary Income Tax
The Iranian fiscal year begins on March 21. Taxes follow a progressive scale based on annual income:
- Tax Brackets (2025/26 estimates):
- 0%: For annual income below a set threshold (approx. IRR 672 million in prior cycles).
- 10% to 35%: Progressive rates apply to higher income levels, with the maximum 35% rate typically triggered for top earners.
- Foreign Nationals: Expatriates are subject to the same income tax rates based on their salary, though the government sometimes uses “assumed salaries” for specific positions (e.g., $7,000/month for managing directors) to prevent under-reporting.
- Current Rate: For the 2025/26 budget, the standard VAT rate is approximately 10% (an increase from the previous 9%).
- Exemptions: Essential items like unprocessed agricultural products, medicine, basic food (bread, rice, milk), and books are exempt from VAT.
- Agriculture: Generally 100% tax-exempt for most activities.
- Free Trade Zones (FTZs): Economic activities in FTZs often enjoy a 20-year tax holiday.
- Manufacturing & Mining: New units can receive a 0 tax rate for 5 years (extended to 10 years in less-developed regions).
- Exports: 100% of income from exporting non-oil goods and services is typically subject to a zero-rate tax.
IRAN COMPANIES
Main Business Entity Types
- Joint Stock Company (JSC) (Sherkat-e Sahaami): Capital divided into shares; can be public (shares traded) or private (shares not publicly traded).
- Limited Liability Company (LLC) (Sherkat ba Masouliyat Mahdoud): Popular for SMEs; members’ liability limited to their capital contribution; requires at least two members, with personal names excluded from the company name.
- General Partnership (Sherkat Tazamoni): Partners have joint and several unlimited liability.
- Limited Partnership (Sherkat Mokhtalet Gheyr Sahami): Has general partners (unlimited liability) and limited partners (limited liability).
- Joint Stock Partnership (Sherkat Mokhtalet Sahami): Combines shareholding partners with unlimited liability partners.
- Proportional Liability Partnership (Sherkat Nesbi): Partners’ liability is proportional to their capital contribution, for trading purposes.
- Cooperative Company (Sherkat Taavoni): For production and consumption, subject to specific ministry regulations.
- Branch Office/Representative Office: Foreign companies can operate in Iran by setting up a branch, though it lacks separate legal status and is subject to local tax.
- Joint Venture: Partnering with an Iranian entity, common in certain sectors.
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Contact us at:
enquiries@chandrawatpartners.com.
enquiries@chandrawatpartners.com.