Law on the
Administration of Free Trade_Industrial Zones Approved by the Islamic Consultative Assembly (1n August 29,1993 Approved by the Expediency Council on November 12,1996 Amended by the Expediency Council on .July 21, 1999 Section One: Purpose Article
1 In order to
accelerate the implementation of infrastructure, development projects, to
enhance economic growth and progress, to raise the level of investment and
public income, to create sound and productive employment, to regulate the labor
and commodities market, to actively participate in regional and international
markets, to produce and to export industrial and processed goods and to provide
public services, the government is hereby authorized to administer as free trade
and industrial cones, the following areas in accordance with legal standards and
the present law: 1 . Kish Island Free Zone, as delineated in the map
attached hereto. 2.
Qeshm Free Zone, a contiguous area not exceeding
three hundred square kilometers situated at northeastern part of the
island whose boundaries shall be determined by the Board of
Ministers. 3. Chabahar Free Zone (according to the map attached
hereto)
Note 1 Free Zones shall benefit from the facilities and privileges provided by this law. Note 2 (Amended July 21 1999) The coastal water boundary adjacent to the
Free Zones, whose area of jurisdiction shall be specified and decreed by
the board of ministers, shall enjoy the advantages of this law solely on the
grounds of ships' bunkering activities
Note
3 The establishment
of new Zones and their boundaries shall be ratified by the Islamic Consultative
Assembly upon such proposal by the government. Article
2 The revenues of the Free Zones should be spent solely within their annual budget which would be approved by the Board of Ministers Development aid for areas outside the free !ones (with lite priority to neighboring areas) should be granted solely upon approval by the Board of Ministers and any other aid shall be considered unlawful use of public property. Section Two: Definitions Article 3 In this
law, the following terms are used in
lieu of the following phrases: Country: The state of the Islamic
Republic k1f Iran. Gone: Free 'trade‑Industrial lone. Authority: Authority responsible for the administration of each Free
Zone. The Majlis: 'I lie Islamic Consultative
Assembly.
Section Three: Functions Article
4 The Board of Ministers is responsible
for: a)
approval of regulations and coordination of all
activities of each Zone. b) approval of the charter of the
authority and companies affiliated thereto. c) approval of the
annual development, cultural programs and budgets, and projected financial operations of the
lone Authorities. d) upon confirmation by the supreme
commander of the armed forces, approval of the security and law enforcement
regulations of the !,ones. e) overall supervision of the activities in
the !ones.
Article 5
Each lone shall be administered by an Authority organized :t; :t company, with autonomous legal status, whose capital shall belong to the government. Such companies and their affiliates and subsidiaries shall be exempt from the laws and regulations governing state‑owned, companies and from other general regulations decreed by the government; they shall be administered solely on the ba%is of the present law and its respective bylaws.with respect to cases not provided in this law and charter, these companies shall he subject to (lie Commercial Code. Article 6 A Board of Directors, consisting of three or five persons, shall administer the Authority. 'I he Board of Ministers shall appoint members of the board of directors. The Managing Director, who shall he the ex officio chairman of the Board, shall be appointed by Presidential decree from amongst the members of the board ofdirectors and shall be tile highest executive authority in the affairs of economy and infrastructure in the Zone. The Managing Director and tile Members of the board of directors shall be appointed for tenure of three years and their reappointment is permissible. Dismissal form the office ofthe Managing Director and the Board Members rests with the same appointing authorities. i‑he responsibility for and the power of general meetings of each Zone Authority are vested with (lie Board of Ministers. Article 7 Upon approval by the Board of Ministers, tile Authority of each Zone is empowered to set up, as deemed necessary, companies, which shall be established in accordance with the provisions of the Commercial Code.
Section Four: General
regulations Article 8
The Authority and its affiliated companies
are permitted to conclude the necessary contracts with natural or legal persons,
whether foreign or domestic, and to participate with domestic or foreign
investors for the implementation of development and productive projects,
according to observance of the stipulations of the Constitution. Disputes and
claims arising out of the concluded contracts, shall be examined and settled in
accordance with (lie mutual agreements and the contractual commitments of both
parties concerned. Article 9 Ministries, organizations, institutes and companies owned by or affiliated to the government, may enter into contracts with (lie Authority or its affiliate companies for (lie purpose of providing facilities or services in each zone, within the stipulations of the Board of Ministers decrees. The terms and conditions of such contracts should be drawn up in a manner to safeguard the competitive position of the respective authority as against the Free Zones of other countries. Article
10 Upon approval by the Board of Ministers, the Authority ofeach Zone is empowered to collect charges from natural or legal persons residing in the 'Lone in return for provision of municipal services and communications, health, cultural, educational and welfare facilities. Article 11 Issuance of permits for any kind of permitted economic activity, construction of buildings and installations and embarking on various occupations which do not fall under a direct responsible head person, by a natural or legal person within the boundaries of the Lone, rests solely with the Authority. Article
12 Regulations governing the employment of workforce, social insurance and security and the issuance of entry visa to foreign national, shall be based on rules which are to be approved by the Board of Ministers. Article 13
Natural and legal persons engaged in any kind of economic activity in a /one are exempt from payment of invoice and property tax as from the dale of the commencement of the operation mentioned in the permit " ith respect to any type of economic activity in the Free lone, and after the lapse of I S years shall be subject to the tax regulations to be enacted by the parliament, upon the proposal by the Board ofMinisters. Article 14
Exchange of goods between the Zones and
outside the country is cxcluded Irorn the provisions of the Export Import
Regulations after being registered at the customs office. Government Regulations
for the export and import of goods and customs formalities with each Zone shall
be approved by the Board of Ministers. Exchange of goods between the Zones and
the rest of the country, whether of commcrcial nature or by travelers is
governed by the general Export‑ Import Re`!ulations of the
country. Article 15
Importation of goods produced in a Free Zone to other parts of the country is exempt from payment of all or a part of customs dutirs and commercial benefit tax up to the added value thereof in the Zone, upon approval by the Board of Ministers. Article
16 Importation of goods produced in a Zone all or Parts of whose raw materials are wholly or partly supplied domestically is exempt from all or a part (Proportionally) of the customs duties and commercial benefit tax relating to the respective domestic raw materials. Article 17
Goods transported from the rest of the country for use and consumption in a Zone shall be constituted as domestic movement of goods, but their exportation from a Zone to the outside world shall be governed by general Export‑Import Regulations. Article 18 (Amended July 21, 1999) A bank and credit institute, in the form of
a public limited company or private joint stock company, owning registered
shares,carrying out banking operations, utilizing the bank title and or credit
institute in the Free Zones, shall be established in accordance with only this
law and the executive bylaw thereof shall be compiled by the central bank and
ratified by the Board of Ministers.
Note 1
The Iranian
bank and credit institute, with domestic and external investment in the Zones,
shall be established upon the proposal of the Zone Authority and ratification of
their articles of association made by the "Money and Credit Council", and
issuance of license by the Central Bank of Iran.
Note 2
Opening of a
branch, by the Banks and credit institute, whether Iranian or foreign shall be
upon the proposal of the Zone Authority and approval of the Central
Bank.
Note 3
The governing
order in determining the equivalence of the Iranian Rial against the foreign
exchange in the Free Zones, shall be ordained by the Board of
Ministers.
Note 4
Transactions in the banking units locate in the Free Zones shall be on the basis of the Iranian Rial and shall be subject to the Islamic Banking Regulations. Banking units, having obtained the license for offshore Banking operations, are banned from transactions with the Iranian Rial. Article 19 Upon approval by the Board of Ministers, the Authority is empowered, within the framework of its approved plan and budget, to obtain and guarantee credits from domestic and foreign sources for the purpose of implcmrnting of infrastructures and productive projects. Repayment of fltese credits shall take place only through drawing on revenues of the /one concerned. Article 20
Inflow and outflow of capital and expatriation of profits generated by economic activities in each Zone are permitted. The required regulation fir attraction and protection of investment in each Zone and the modality and participation of foreigners in activities in each Zone shall be approved by the Board of Minister. Article
21
(Amended on July 21, 1999) The legal rights of investors, the acceptance of whose capital investment has been decreed by the Board of Ministers, shall be guaranteed and protected. Should the capital of such investors be nationalized to the favor of the public or their properties being dispossessed of, a fair compensation shall be undertaken by the government. 'The regulations thereto the manner of acceptance of such investments and the manner of compensation shall be in accordance to the bylaw decreed by the Board of Ministers. Article 22
(Amended on July 21, 1999) Registration
of'cornpanies, intellectual and industrial property rights, as Nvell its
registration of ships, vessels and aircralls in the Zone, shall be, accomplished
with due to consideration ofthe article 81ofthe constitution, in accordance with
the bylaw decreed by the Board of Ministers.
Note
Registration
ofcompanies and intellectual and industrial property rights in each Zone shall
be accomplished by the Organization ofthat Zone. Article 23
The Autlioriton is entitled to open representative offices wherever dcerned necessary. Article 24
Utilization of land and national resources belonging to the government within eirch /one and (lie sales or lease thrrcof it) Iranian nationals Shall be determined by regulations as approved by tile Board of Ministers and with regard to the development plans of'each 'Lone. The Authority of each 'Lone shall be responsible for the enforcement of relevant regulations. Renting of land to foreign nationals iv permitled but
its sale thereto is strictly forbidden. Article 25 The president and directors of each lone
Authority, managing directors and board members of affiliated companies,
all the ministers and the heads of government organizations, heads
of thejudiciary power, the Supreme Court and Administrative Justice
Tribunal, the public prosecutor, the chief of state
inspectorate, their respective deputies and advisors, Members of the Ma .jlis,
governor ‑‑ general, mayors and their deputies and their respective first degree
relatives are not authorized to hold shares in companies established by a
lone Authority or in private companies operating in the Zones. Article 26 The bylaws for implementation of this Law shall be approved by the Board of Ministers. Article 27 In order to coordinate the actiN ities %N ithin the Zones, and its the case may be, and with the approval ofthe competent minister, one ot'the following two procedures may be adopted:
a. l'he executive organizations (affiliated to the executive power may transfer their authority to the chairman and Managing Director of (tic Free Zone Authority). b.capacities in the
Zones shall be appointed by tile proposal of the chairman and managing director
of the Zone Authority and the ordinance of the competent authority in the
executive establishment. Article 28
( Ratified on
July 21, 1999) Copyright
© 2002 Irano-British Chamber of Commerce, Industries and Mines. All
rights reserved.
Revised: 1 March, 2004. |