The Foreign Investment Protection and Promotion Act of Iran of 2002 (FIPPA) does not give a precise definition of investment. However, according to article one of the law, it shall include any cash or non-cash flow of investment into the country and could encompass cash flows in foreign currency through the Iranian banking system or other legitimate means, machinery, spare parts, raw materials, CKD (knock-down-kit) and SKD (semi-knocked-down-kit) parts, intellectual property such as knowhow, patents and registered names, technical services, transferable share dividends and anything else if approved by the Council of Ministers. Foreign direct investments are allowed only in sectors in which private ownership is permitted. Build Operate Transfer (BOT) agreements and Civil Partnerships can be used in all areas, including upstream oil and gas industry, where foreign direct investment is prohibited due to a constitutional ban.
With the enactment of FIPPA, obtaining an investment license has become very straightforward. As a rule of thumb, there is a minimum amount of $ 300,000 to apply for a FIPPA license. The entire process of obtaining a license should take no longer than 45 days since the date of submission of documents to the Organization for Economic and Technical Assistance of Iran (hereinafter “OIETAI”), the main foreign investment authority in Iran. The application can be submitted directly by the foreign investor or their legal representative in Iran. The application form is downloadable online, must be completed in Persian or in English language and is reviewed by the OIETAI in coordination with the relevant Ministry. This stage may last up to 15 days. OETAI refers the application to the Foreign Investment Board which shall make the final decision regarding the admission of the foreign investment. The Foreign Investment Board is the highest-ranking authority and is the authority which finally issues the FIPPA license. The board includes six high-ranking official members of the government, the head of OETAI and some other prominent figures.
Should the Board reject the application, the decision can be appealed; in case the application is accepted, the license is signed by the Minister of Economic Affairs and Finance. The license is then communicated to the foreign investor by OETAI. The latter stage might take a maximum of 30 days, without considering the delay which may be caused by an appeal request.
A FIPPA license lists the amount of foreign investment, name of foreign and Iranian partners, type and area of investment, means for transference of capital contributions and the requirements regarding the investment project. The license is issued for a specific period during which at least part of the investment must be transferred to Iran. Foreign investors can file a request for an extension prior to the expiry of the deadline set by the Board of Investment, mentioning justified reasons for such a request. This request will be reviewed by the Board of Investment. If no investment is made during before the given deadline, absent justifiable excuses, the license will be revoked.
In general, merely commercial or trading activities do not qualify for FIPPA license unless they are accompanied by production. Investment in services may qualify for a FIPPA license subject to the decision of the Board.