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
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
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
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
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.
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.
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.
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
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.
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.
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.
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.
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.
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 of Ministers.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The Autlioriton is entitled to open representative offices wherever dcerned necessary.
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.
Note 1: Renting of land to foreign nationals iv permitled but its sale thereto is strictly forbidden.
Note 2 : Iranians residing in the islands, subject to the Free lone, shall enjoy the same rights of ownership of the land and improvements thereto as the rest of the country. The registry of the Deeds and Properties Organization is obliged to issue title deeds to individuals in accordance with laws and regulations.
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.
The bylaws for implementation of this Law shall be approved by the Board of Ministers.
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)
Establishment and activity 0f Iranian insurance institutes with domestic and foreign capital investment, the branches and representative as well as insurance agency representative in the Free Trade Industrial-Zones of the Islamic Republic of Iran is permitted and shall be only subject to the regulations proposed by the Bimmeh Markazi Iran and approval of the Board of Ministers.