Iran attracts investors despite the complicated political situation in the region. The country has a well-developed economy and is rich in natural resources, particularly, in oil and gas. If this location interests you from the point of doing business, it is possible to arrange a commercial presence here in one of these forms.
Major Forms of Legal and Business Presence
Establishing a commercial presence for an investor is possible by using one of these most widespread business registration forms:
- Limited Liability Company (LLC) – a body corporate that can be established by two or more persons whose financial liability is limited to the extent of contributions made only. From a legal point, this entity is deemed to be finally formed only after the entire amount of registered capital has been fully paid up.
- Joint-stock Company (JSC) – this entity type can be formed by three persons at least who are liable within the value of shares owned. This entity is considered to be a trading company by default. Most of the advantages are open up to non-residents when registering a private JSC where shares are not offered to the public freely unlike a public JSC that can do such public offerings. The amount of chartered capital may vary: (i) for a private company it must not be less than IRR 1 million, (ii) for a public company it must not be less than IRR 5 million at the time of incorporation.
Registration Requirements and Steps
Establishing a company in Iran is possible if the founders contribute authorized share capital and immediately transfer 35% thereof to an account opened with the Iranian bank. The money transfer to the account must be confirmed by the bank. To register an organization in the official register you need to:
- Provide the registrar (in the Commercial Register) with a package of constituent documentation, including personal information about the beneficiaries, and encode it with bar codes. Such documentation shall include among others:
- certificate, TIN;
- the corporate charter and the decision of the owners to register the company in Iran;
- orders on representatives and directorate appointment – plus copies of their travel passports;
- certificate of the parent company’s financial status.
The documentation is certified at the Iranian embassy and the translations – at the Ministry of Justice of the country. The representative draws up the power of attorney and signs copies, after that the company can be registered.
- Pay the fee for the company registration.
- Publish the notice in the official bulletin and, additionally, in a large-circulation Iranian newspaper after the application consideration and registration.
- Purchase accounting journals and registers (state seals are put on them).
- Enter employees into the social insurance system and transfer information about the size of their salaries to the labor department.
With the proper paperwork, registration procedures take up to a week if all legal formalities are observed.
Legal and Regulatory Framework
Registration of a company in Iran implies that the company becomes a subject of intra-national legal relations – the residence of the founders and the origin of the funds is insignificant. The following is among the mandatory conditions set by the authorities:
- setting up an Iranian registered office and hiring of an agent;
- an indication of the organizational form in the title;
- the hiring of at least one director;
- disclosure of information about the company to its agent;
- reporting preparation (no audit is required).
Iran stimulates entrepreneurial activity, inclusive of external investors, and special economic zones (SEZ) and special territories have been created in the country for this purpose with a variety of tax incentives.
Tax System of Iran
Evaluating the following tax highlights may be also important for company formation in Iran:
- Corporate income tax (CIT) rates – 25%
- Personal income tax rate – a progressive scale of rates is applied (maximum 35%) depending on the amount of income
- Value-added tax rate – 8%
- Withholding tax (for non-residents) – (i) dividends – not applicable (N/A), (ii) interests – N/A, (iii) royalties – 2.5–7.5%
- Capital gains tax (for non-residents) – N/A.
Advantages of the Jurisdiction
An option of company registration in Iran shall be considered along with the next benefits the jurisdiction offers:
- Information about the business founders and the beneficiaries is not entered into the open registry.
- There is no currency control in the country.
- Availability of SEZ where importing goods without paying duty at customs is allowed.
- Tax preferences in certain cases (for VAT and income tax).
How Prifinance Specialists May Help You
Experts of Prifinance company will help to accelerate the procedures and deploy business guaranteed legally, in compliance with the norms of Iranian legislation. We undertake organizational, legal issues, representative functions, and provide the customer with detailed advice on taxation, special economic zones, and other aspects. We offer prompt company registration and bank account opening services in Iran and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.