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Iran Profile

Industry profiles for Iran
Agribusiness; Construction; Education and training; Health services and pharmaceuticals; Mining; Oil and gas
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Business etiquette

Iran is an Islamic Republic and as such presents local customs and standards of behaviour which differ greatly from those of Australia. These Islamic standards are to be adhered to not only to ensure acceptability in a different environment but also because these are legally enforceable. Non-observance can result in criminal charges being laid.

Business practices:

  • Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.
  • Iranians are very formal and it will take several meetings before a more personal relationship can be established. This is particularly true for government officials, representatives of state controlled companies and foundations. Negotiations will be long, detailed and protracted.
  • Tenders are strictly required for government contracts for purchasing or projects. These are rarely competitive. Breaking up contracts into smaller parts is a common practice to try and incorporate local capability and also to negotiate on specific prices.  It is recommended to maintain a package approach.
  • Many approaches by state companies and organisations are aimed at obtaining information to be used in negotiations with a preferred supplier.
  • Shaking hands with male counterparts and the exchange of business cards is the usual form of introduction. Shaking hands with women is forbidden.
  • Tea, fruit and/or cakes are served at any meeting and you are encouraged to sample.
  • With local agents and Iranians working with foreign companies who have had a greater exposure to Western norms cultural differences are less constraining.
  • Government employees will only attend 'dry' functions and usually only if they are held in a neutral environment, eg. a restaurant.
  • Although ties are not worn by Iranian men, the usual business attire for foreigners is a suit and tie when attending meetings and receptions. Women must wear an ankle length overcoat (ropoush) and headscarf (hejab) at all times in public. However, in some major cities these regulations are becoming more relaxed and today’s norm is served by an all-purpose outerwear knee-length coat. Shorts are not allowed.
  • Exchange of gifts is a tradition among private sector business people.
  • Alcohol is prohibited. You cannot legally import nor consume alcohol in Iran.

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Orange Arrow Import restrictions
Orange Arrow Tariff
Orange Arrow Packing, marking and labelling
Orange Arrow Weights and measures
Orange Arrow Insurance
Orange Arrow Methods of quoting and payment
Orange Arrow Public health requirements

All shipments and correspondence must be addressed to Iran, Persian Gulf. The term 'Arabian Gulf' must not appear on the consignment itself or on any accompanying shipping documents.

Import restrictions

Permitted items no longer require specific approval from the Ministry of Commerce. Only registration by the Ministry is required. Authorisation from one or several Ministries is required for the import of various specified items.

The import of luxury or non-essential products and services are restricted. Regulations favouring local production have been enacted where possible:

  • All foreign suppliers of equipment and machinery must have official representation in Iran.
  • Imports of cigarettes, tobacco, cigars, cigarette paper, cigarette tips and silkworm eggs are subject to government monopoly.

Imports to Iran valued at more than IR500,000 must undergo pre-shipment quantity and quality inspection in their country of origin by an internationally recognised inspection organisation. Goods exported to Iran must be subject to invoices authenticated by the Iranian Embassy and by a nominated Chamber of Commerce operating in the supplier's country.

Survey and certification must take place prior to consignment in the country of origin.

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Iran follows the Harmonized Commodity Description and Coding System for classification of goods subject to import duties. Customs duties and beneficiary taxes are levied on most imported goods. Duties are mainly ad valorem and assessed on a CIF (Cost, Insurance, Freight) value basis (Incoterms 1990). Capital goods and raw materials imported for foreign investments may be exempted from normal duties; similarly medicines, wheat and other strategic goods are exempt from duties. However, most imports are subject not only to licensing fees and tariffs, but also to local taxes.  Exchange control authority is vested in the Central Bank (Bank Markazi). All foreign exchange transactions must take place through the Central Bank or authorised banks.

Specific duties are levied on a net weight basis.

Following is an indicative listing of tariff rates:

  • chemical products - 10 per cent
  • ordinary metals - 10 per cent
  • measurement instruments - 10 per cent
  • medical equipment - 10 per cent
  • food industry - 15 per cent
  • mining raw production - 15 per cent
  • leather industry - 15 per cent
  • paper and wood fabrics - 15 per cent
  • mechanical machinery - 15 per cent
  • agricultural raw production - 25 per cent
  • electric machinery - 25 per cent
  • automotive vehicles - 100 per cent

Wheat and other strategic goods are exempt from duties. Earnings resulting from the transit of commodities through Iran are fully exempt from taxation provided that the commodities in question do not undergo any modification.

A General Guide on Iranian Customs/Tariff Information, including details of general import licenses requiring the approval of relevant Ministries (eg. Ministry of Health for pharmaceuticals) is also available on online for reference purposes. The Iranian importer is responsible for arranging the appropriate license approval.

Export regulations are governed by the Export - Import Law. The Pricing Committee is the body responsible for assessing export tariffs. Customs clearance forms are required for the export of goods.

Customs authority contact details:

President of the Customs Administration of the Islamic Republic of Iran
Vali-e-Asr Avenue
PO Box 6369
Tehran 14155
Tel: (98 21) 890 9215
Fax: (98 21) 890 6291

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Packing, marking and labelling

  • Goods should be securely packed, in consideration of their nature, the chosen means of their transportation and the climatic conditions likely to prevail during transit and delivery.
  • In addition to carrying the usual information, the labels should indicate the gross weight of the shipment, its country of origin and the trade name and mark of the manufacturer.
  • Packing material used to secure the shipment, including tape and labels will be prohibited entry if they bear a foreign trademark.
  • Special labelling regulations apply to foodstuffs, cosmetics and pharmaceutical products intended for medical and veterinary purposes. It is recommended (and some cases required by law) that labelling and instructions for use be written in the Farsi (Persian) language.

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Weights and measures

The metric system is used throughout Iran.

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Insurance cover must be arranged through one of the Iranian state-owned insurance companies. Obtaining insurance cover is normally the responsibility of the importer. 

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Methods of quoting and payment

Quotes should be CIF and FOB (Incoterms 2000) and formulated in US dollars unless otherwise stipulated. Payments are usually by ILC, but more often on Usance (differed payment) of 180-360 days.

The Iranian Central Bank is the ultimate arbiter in all foreign exchange transactions. Iranian banks are not allowed to confirm letters of credit. Suppliers requiring confirmation should be able to arrange this independently through their banks. ANZ, Lloyds Bank and HSBC all have representative offices in Tehran.

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Public health requirement

Imports of live animals, seeds, plants or parts thereof must be covered by a health certificate issued by an approved authority in their country of origin. In Australia, this is usually the Australian Quarantine and Inspection Service (AQIS), the Commonwealth Department of Agriculture, Fisheries and Forestry-Australia or the relevant state department of agriculture.

Imports of animals, seeds and plants also require prior approval from the Iranian Ministry of Agriculture Jihad.

Imports of foodstuffs, medical equipment, pharmaceuticals and cosmetic products require test certificates and authorisation from the Ministry of Health.

A certificate of free sale may also be requested (see 'Special certificates').

Imports of saccharine and foods containing saccharine is generally prohibited. 

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Orange Arrow Pro-forma invoice
Orange Arrow Commerical invoice
Orange Arrow Certificate of origin
Orange Arrow Bill of lading
Orange Arrow Packing list
Orange Arrow Special certificates

All documents must be attested by a member of the State Chamber of Commerce and the signature subsequently authenticated by the Embassy of the Islamic Republic of Iran in Canberra. There are some exceptions to this requirement; further information could be obtained from the Embassy.

Pro-forma invoice

A minimum of four copies of the pro-forma invoice will be needed by the importer for him to apply for the necessary import authorisations and for the establishment of the required documentary letter of credit. Confirmed irrevocable letters of credit are preferred. Counter trade arrangements, especially involving oil, are becoming increasingly popular.

Pro-forma invoices signed by the importer and accompanied by a translation in Farsi, must be submitted to an approved bank. A copy of the invoices must also be sent to the Central Bank, who will examine the order for essentiality and price.

The pro-forma invoice must include the following information:

  • invoice date and number
  • itemised description of goods, quantity, unit price and total amount for each item specified
  • total FOB (Incoterms 2000) amount
  • freight charges and the total C&F amount (Incoterms 2000) 
  • tariff number(s)
  • gross and net weight
  • packing specification
  • country of origin
  • validity terms and conditions
  • payment and expected time of delivery

The pro-forma invoice should also contain an affidavit bearing the following statement: “This is to certify that this pro-forma invoice is correct and the prices quoted are in accordance with market prices. We confirm that there is no other transaction between us and the purchaser with regard to this pro-forma invoice.”

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Commercial invoice

Four copies are required. The invoice should indicate:

  • invoice date
  • invoice number
  • name and address of buyer and seller
  • pro-forma invoice
  • order or contract number
  • quantity and description of the goods
  • weight of the goods
  • number of packages
  • shipping marks and numbers
  • terms of delivery
  • payment and shipment details
  • L/C number
  • Iranian customs tariff number
  • itemised costing details (per unit and total)
  • insurance and freight charges

Commercial invoices must bear the following signed declarations:

“We certify this invoice to be true and correct and in accordance with our books, also that the goods are of ................. origin. We hereby certify that the prices stated in this invoice are the current export market prices for the merchandise described therein and we accept full responsibility for any inaccuracies or errors therein.” 

In cases where the preceding declaration would not be suitable, the following declaration should be used: 

“We certify that the prices quoted in the present invoice are correct and represent the amount to be paid in respect of commodities referred to therein, and no extra payment in cash or kind and no special discounts except those referred to in the invoice have been made. We hereby assume and accept full responsibility for this statement.” 

Certification by a recognised Chamber of Commerce (see 'Guidelines', section 2.3) and authentication by the Embassy of the Islamic Republic of Iran may be required under the terms of the letter of credit.

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Certificate of origin

Three copies are required and usually certified by a Chamber of Commerce. When specified, authentication by the Embassy of the Islamic Republic of Iran is required.

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Bill of lading

Four copies are required, which must indicate:

  • the port of departure and destination
  • two copies of the bill of lading should be sent to the importer's bank

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Packing list

Six copies are required, evidencing shipment of goods.

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Special certificates 

  • Importation of plants, seeds, and live animals require authorisation from the Ministry of Agriculture Jihad. Animals, plants and their products also require health certification issued by an approved authority in the country of origin.
  • The importation of foodstuffs, medical equipment, pharmaceutical and cosmetic products require test certificates and authorisation from the Ministry of Health. A certificate of free sale issued by competent authority proving that the product is allowed to circulate in its country of origin may also be required. In Australia the issuing body is generally either the Therapeutic Goods Administration or the National Registration Authority for Agricultural and Veterinary Chemicals.
  • Imports of computer software and hardware are subject to authorisation by the High Council of Informatics. The import of broadcasting equipment requires a special permit issued by the Ministry of Information and Communication Technology-ICT (new name for the Ministry of Post, Telegraphs and Telephone).
  • Imports of tyres must be accompanied by an authenticated certificate issued by the manufacturer certifying that the product specifications meet the industry standards.
  • Importers' instructions must be followed if other certificates are required.
  • Supplier's certificate - the importers' instructions should be followed if a supplier's certificate is required

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Labour laws

A continuing strong labour force growth unmatched by commensurate real economic growth is driving up unemployment to a level considerably higher than the official estimate of 14%.  According to the DFAT publication Accessing Middle East Growth annual economic growth above five per cent would be needed to keep pace with the 900,000 new labour force entrants each year. 

Foreigners with special expertise and skills have little difficulty in obtaining permits. Work permits are issued, extended or renewed for a period of one year. In special cases, temporary work permits valid for a maximum period of three months may be issued. An exit permit must be obtained for a stay longer than three months.

The maximum working week is 44 hours, with no more than eight hours any single day unless overtime compensation is provided. Overtime could not exceed four hours per day. Friday is the weekly day of rest. Overtime is payable at 40 per cent above the normal hourly wage. There are allowances for shift work equivalent to 10, 15 or 22.5 per cent of a worker's wage, depending on working shift (eg. evening, morning and night)

Workers are entitled to public holidays and a paid annual one-month leave. For workers with less than a year of employment, annual leaves are calculated in proportion to the actual length of service. Furthermore, every worker is entitled to take one full month of paid leave or one month of unpaid leave (if no leave is available) once during his or her working life in order to perform the pilgrimage to Mecca.

The employment of workers less than 15 years of age is prohibited. Young workers between 15 and 18 years of age must undergo a medical examination by the Social Security Organisation prior to commencing employment. Women are entitled to a 90-day maternity leave.

There is a minimum national wage applicable to each sector of activity fixed by the Supreme Labour Council. Workers and employers have the right to establish guild societies. Collective bargaining is allowed. Membership in the social security system for all employees is compulsory.

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The establishment of the Islamic Republic, governed as it was by strong revolutionary sentiment and the widespread nationalisation and confiscation of private enterprises, resulted in a virtual cessation of foreign investment. 'Self-reliance' became the main theme of economic policy following the Revolution. Moreover, the relatively high oil prices prevailing until the mid-1980s enabled Iran to earn substantial foreign exchange revenues. Following this, the country gradually began to disregard the importance of foreign investment.

In the period that followed the Iran-Iraq war, policy sentiment changed gradually and Iran began to adopt a more open approach towards foreign participation. Initially, the country sought to finance its industrial development through a buy-back arrangement scheme with foreign investors, whereby the investing entity would commit itself to purchase a proportion of the goods produced by its Iranian plant. This only attracted total foreign investments worth A$1 million during the First Five Year Development Plan (FFYDP), against a planned figure of A$10 billion.

Despite the hostility of the government and Majlis to foreign investment in Iran’s economy, 'buyback' contracts dominate the oil sector. Under such contracts, which are a hybrid of a service contract and a production-sharing agreement, foreign companies fund and execute the agreed development project. Repayment of capital expenditure, as well as the agreed remuneration, is recouped from the sale of the product from the venture, though ownership and, usually, day-to-day management returns to the government once development is complete. Subsequent variations to this format have granted investors recompense from other sources if the venture in question is not viable. In January 2004 Iran announced modifications to the 'buyback' model, extending the length of such contracts from the present 5–7 years to as many as 25 years while allowing for continued involvement of oil companies after the field is handed back to Iran.

In 2002, after a year of intense debate, Iran enacted its first foreign investment law since the 1950s as part of a package of reforms intended to open up the economy and to reduce the country’s dependence on oil revenues. Analysts have commented, however, that the tortuous debates surrounding the introduction of the act had done nothing to improve investors’ confidence towards the Islamic republic. Still, the move was considered an important step in the right direction.

The law overhauled and consolidated various older regulations that had loosely regulated foreign investment in Iran. Though technically implemented in late 2002, most FIPPA regulations were not common public knowledge or used until late 2003.

The 26-article law streamlines procedures for foreign investors but contains certain limitations to foreign investment. Crucially, it allows for international arbitration in legal disputes, a key demand for foreign investors unwilling to be subjected to the vagaries of the Iranian judicial system. Equity participation in companies had previously been permitted, but the FIPPA formally provides the first legal framework for foreign investment under contracts such as build-operate-transfer (BOT), buyback (under which foreign oil companies operate) and civil partnerships. The legislation states that foreign investment will be guaranteed compensation if nationalisation should occur.

To address concerns over a foreign 'domination' of the economy, ceilings have been set to contain foreign investment. Overall, foreign companies are not allowed to control more than 25 per cent market share in certain sectors of the economy, such as agriculture or tourism, and no more than 35 per cent of individual industries. No ceilings apply to export-oriented investments, however.

Because of the reluctance to foreign investment from both the present government and Majlis, it seems unlikely that foreign investors will be able to take full advantage of the opportunities created by FIPPA in the near future.

Provisions of the Act entitled Foreign Investment Promotion and Protection Act (FIPPA) include:

  • Allowing foreign investment in all sectors opened to Iranian private companies.
  • A review of the definition of “Foreign Investor” to include Iranian expatriates provided that their investment capital originates from abroad.
  • Allowing repatriation of local sales related profits in addition to export-related profits in hard currency at the current exchange rate.
  • Fair compensation in case of nationalisation.
  • The establishment of a maximum 45-day period for the processing of individual foreign investment applications.

The Act clearly empowers the Ministry of Economic Affairs and Finance in all matters related to foreign investment and seeks to provide for a broader coverage of the legislation in including for instance certain foreign investment schemes such as 'Buyback Agreements' not previously covered under the old regime.

The Organisation for Investment, Economic and Technical Assistance of Iran (OIETAI) is responsible for receiving and processing all foreign investment applications:

Organisation for Investment, Economic and Technical Assistance of Iran
Park-e-Shahr. 15 Khortdad Sq/ Davar St.
11365-9618, Tehran
Tel: (98 21)  3911655 
Fax: (98 21) 3901033

OIETAI  is also responsible for approving overseas Iranian investments. In other words, the organisation is in charge of consolidating and implementing two-way foreign investment flows.

Reductions in corporate and income taxes, and moves to liberalise the Tehran Stock Exchange have also indirectly encouraged foreign investments. However, given the current perception of political risk throughout the region, investors are of the opinion that Iran needs to go much further down the liberalisation track to attract further business.

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Setting up an office

General laws and regulations regarding foreign business in Iran could be regrouped under the following categories:

  • Contract work - A foreign company is allowed to be involved in contractual work in Iran, for example in providing technical assistance to newly established or existing manufacturing companies, for the drawing and supervision of design, engineering, or construction contracts, or for the provision of turnkey contracts for dams, refineries, power stations, and oil fields. Such work may be performed either directly by the foreign company or through a registered branch in Iran.
  • Direct sales - Most foreign companies are involved in direct sales to Iranian customers through letters of credit and, occasionally on the basis of Usance.
  • Investments - In accordance with the terms of the Foreign Investment Promotion and Protection Act, foreign companies may invest in newly established factories and industries. Foreign companies are allowed to own 100 per cent of the businesses in the free economic zones. Such free-trade (FTZ) and special economic zones (SEZ) have been established to provide additional investment incentives such as unlimited shareholding in joint ventures, flexible employment regulations, 15-year tax exemptions, etc.

The free-trade zones at the ports of Qeshm, Kish and Chah Bahar were opened in 1989. The Iranian Cabinet has recently approved a fourth FTZ between the cities of Abadan and Khorramshahr in the Khuzestan Province.  One of the latest SEZ is the Mines and Metals Special Economic Zone, 20 kilometres west of Bandar Abbas. 

It was recently reported in Iran Focus that foreign investment in the FTZs reached US$300 million in the past year, of which US$160 million went to the Qeshm FTZ. During the same period, the value of investment in the Kish and Cha Bahar FTZs amounted to US$130 million and US$10 million, respectively.

Once in possession of a special permission from the Land Registration Office, foreign nationals can own or lease property for commercial or industrial use and for personal residence, but they cannot own agricultural land.

In order to prevent adjudication by the Land Registration Office, upon terminating their residence in Iran foreigners must transfer their property within six months of departure to an Iranian citizen or to a foreigner holding an ownership license.

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The railway system has been extended in the years since the end of the war with Iraq, but remains inadequate. The standard-gauge rail network connects 13 of Iran's 24 provinces and comprises a set of five, mostly single-track lines radiating from Tehran. Three run southwards: to Bandar Imam Khomeini on the Gulf (with a spur to Khorramshahr); to the Gulf port of Bandar Abbas near Qeshm; and a third line heads towards the Pakistani border, stopping short at Kerman (with a spur running to Isfahan and Shiraz).

Of the northern lines, the one running to Mashhad has been extended to connect to the Turkmen system (which operates on a different gauge) at Sarakhs and has a spur running up to Gorgan. A fifth line connects Tehran to Tabriz and then splits to link with the national rail networks of Turkey and Azerbaijan.


A comprehensive highway construction programme was initiated by Mohammed Reza Pahlavi and now extends to 167,157km. Conflicting pressures over the allocation of the scarce resources available to the sector have resulted in poor coordination of plans.

In addition to the paved road network, there are some 73,000 kilometres of unpaved roads serving remote areas. The 2500-kilometres A1 highway runs from Bargazan on the Turkish border, across Iran, to the Afghan border in the east. The A2 links the Iraqi border in the west to Mirjaveh on the Pakistani frontier.


A huge rise in the number of vehicles occurred in the early-1990s. In 1990 there were only 27,371 registered vehicles, of which some 8000 were vans and heavy goods vehicles. By 1996, the total figure had leapt to 2,900,000, of which approximately 700,000 were vans or heavy goods vehicles. Most of the increase in registration was in private cars (80 per cent of passenger cars are privately owned) and inevitably, this has led to increased demand for fuel, severe overcrowding on Iran's roads and mounting pollution problems. Government estimates put the average annual increase in domestic fuel consumption at six per cent per year, well above the real economic growth rate. The government has sought to limit motor use by raising domestic fuel prices, but petroleum products in Iran remain heavily subsidised and among the cheapest in the world.


Since the war with Iraq, Bandar Abbas has overtaken Khorramshahr as the country's major port, handling three-quarters of the 20 million tonnes of cargo that pass through Iran's Gulf ports each year. Smaller ports at Bushehr, Bandar Lengeh and Chah Bahar have also assumed greater importance. Kharg Island is the main oil terminal. In addition, the Caspian ports have benefited from Iran's attempts to develop its relations with the Central Asian republics, while modernisation programmes have been implemented at Bandar-e Anzeli and Chah Bahar. Determined to reduce export costs, the government has created a national shipping line serving routes in the Gulf. The Bonyad-e Mostazafan also runs freight services to Europe via the Suez Canal.


Three major international airports at Tehran, Bandar Abbas and Abadan are supplemented by 10 Grade One and 11 Grade Two airports located across Iran. International airports have also been opened at the free-trade islands of Qeshm and Kish. The state-owned national carrier, Iran Air, serves 15 Iranian cities and runs scheduled routes in the Gulf, Asia and Europe. The country's second largest carrier, Asseman Airlines, serves the main cities in Iran and also runs services to Asia and the Gulf.


Iran's telecommunications sector has received a significant portion of government spending. Ambitious plans drawn up by Iran's state-owned provider, the Telecommunications Company of Iran (TCI), will see penetration level increase to around 130 lines per thousand people. TCI's major drive has been for the provision of a countrywide mobile telephone network, to avoid the need for an expensive upgrade of the country’s analogue land system. The system has already reached, if not exceeded its full capacity, making it difficult to make mobile phone calls at peak times.

Internet access has also improved in recent years with an estimated more than 1500 Internet cafes now operating in the capital only. Until recently the cost, rather than official censorship, has been the greatest hindrance to a wider use. It should be noted, however, that current TCI regulations require Internet Service Providers to filter all material presumed immoral or impacting on state security. According to these rules, providers that do not strictly comply risk losing their license and face court action. Implementation of these rules has so far been ad hoc, but would be tightened at times of political tension.

The state retains control over land radio and television broadcasts. Although formally illegal, the use of satellite television receivers in urban areas is widespread. Iran's press flourished under the early years of President Khatami's first administration, but the closure of some 40 of the most outspoken publications by the the courts in 2000 and early 2001 has dampened publishers' enthusiasm for vibrant and open political commentary.

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In general, all individuals are liable to pay taxes on income earned in Iran. Taxes apply to:

  • The income of Iranian citizens and residents’ earned overseas.
  • The income earned in Iran by Iranian citizens residing overseas.
  • Income earned by foreign entities operating in Iran or overseas and derived from the granting of concessions and/or rights in Iran; and/or from the provision of training and/or technical assistance in Iran.

According to the Economist Intelligence Unit, Iranian taxation laws are highly complex and inconsistently applied. Iranian taxation generates particular unease among foreign firms because they appear to be arbitrarily enforced – tax bills are initially based on 'assumed earnings' calculated by the Finance and Economy Ministry according to the size of the company and the sector in which it operates. Factors such as the quality and location of a company's offices are also widely believed to have an impact on tax assessment.

It is essential that expert advice be sought when drawing up contract documentation and that taxation matters be clarified as much as possible. It should be noted that exit visas and capital transfer authorisations are only granted upon presentation of evidence of income tax clearance.

The government is currently reviewing its taxation system with a view to reducing corporate taxation levels and simplifying the taxation administration but the process is slow, and foreign firms continue to face considerable uncertainty.

Personal income taxes are set with little reference to actual earnings, but are instead determined in large part by the nationality of employees and the firms for which they work. From these and other factors, tax inspectors determine how much they believe employees are likely to earn, and tax them accordingly. There is a process of appeal and negotiation, but it is slow and cumbersome.

The 2002 amendment to the Taxation Act (the Amendment) approved in February 2002 was significant. Some of the changes affecting the activities of Iranian and foreign corporate entities as well as the expatriate employees are summarised below:

1.  Corporate tax
A new flat rate corporation tax of 25 per cent payable on the profits of corporate commercial entities has been introduced. This rate replaces the old corporation tax of 10 per cent and progressive rates of income tax (12-54 per cent) on reserves and distributable income. Apart from the 25 per cent corporation tax and the 0.3 per cent Chamber of Commerce tax no more taxes will be payable by the corporate entity or the shareholders.

The new rate of corporation tax will also apply to joint venture corporate entities registered in Iran. The tax incidence will therefore be on the corporate entity and not on the shareholder. The calculation of the tax has been simplified.

All contracting work performed by foreign contractors, whether or not the company is registered in Iran, is taxed. For contracts signed before March 21st 2003, gross taxable income is calculated as gross contract receipts less the cost of imported material. Income is then taxed at 12% of gross taxable income less contract retention. For contracts signed after March 21st 2003, taxable income is the gross contract receipts less contract expenses. Income is taxed at 25 per cent less 5 per cent taxes withheld at source.

2.  Taxation of foreign companies
The Tax Act had divided the source of income earned by foreign companies either direct or through their branches in Iran into three main categories: 

  • Income earned in Iran by way of contracting operations
  • Income earned from Iran by way of royalties and licensing fees
  • Other activities - trading operations, etc

The Amendment has introduced certain changes in the tax treatment of the above activities.

Income from royalty and licensing fees received from industrial and mining companies, government ministries and municipalities, and income from film-screening rights are subject to a deemed taxable coefficient on income of 20 per cent. All other income from royalties and licences from foreign companies is subject to a deemed taxable coefficient on income of 30 per cent. The coefficients are based on the standard corporate tax rate of 25 per cent, so that the effective tax rate is either 5 per cent or 7.5 per cent.

Note: The amendment has removed the confusion surrounding 'technical assistance contracting' by including 'technical assistance' and 'transfer of technology' in contracting operations subject to tax on the basis of 12 per cent of annual fees.

Other income earning activities of foreign branches will be subject to taxation on an actual basis, ie. based on their income tax return as filed and supported by their statutory accounting books.

Expenses incurred in Iran by Iranian registered branches and representative offices of foreign companies that are not authorised by their head offices to engage in any trading activity but are only authorised to conduct marketing and market research in Iran are tax deductible upon presentation of receipts from their head office.

3.  Taxation of salaries and wages
The Amendment has substantially reduced the rates of taxation on individual salary earners (including expatriate employees). It must be noted that all allowances and the '30 per cent absorption allowance' have been repeated. The tax is calculated on an annual basis, deducted from the gross monthly salary and paid to the tax authorities within 30 days by the employer. Late payments incur penalties.

The tax free allowance and the taxation rates since February 2002 are as follows:
  • Annual salary up to Rials 23,40,000; exempt from tax
  • Annual salary over Rials 23,400,000 to Rials 30,000,000; tax shall be computed at the rate of 15% of the amount exceeding Rials 23,400,000
  • Annual salary over Rials 30,000,000 to Rials 100,000,000; tax shall be computed at the rate of 20% of the amount exceeding Rials 30,000,000
  • Annual salary over Rials 100,000,000 to Rials 250,000,000; tax shall be computed at the rate of 25% of the amount exceeding Rials 100,000,000
  • Annual salary over 250,000,000 to Rials 1,000,000,000; tax shall be computed at the rate of 30% of the amount exceeding Rials 250,000,000
  • Annual salary over Rials 1,000,000,000; tax shall be computed at the rate of 35% of the amount exceeding Rials 1000,000,000

4.  Share transfer tax
The Amendment has changed the regulations regarding calculation of tax on transfer of shares and their rights in Iranian corporate entities.

In the case of shares listed on the Tehran Stock Exchange (TSE) the tax on transfer of such shares and other rights is 0.5 per cent of the sales price. No other taxes are payable.

In the case of transfer of the shares and their rights to other corporate entities (ie. those not listed on the TSE) a flat rate of four per cent of value of the shares and rights transferred applies. No other taxes will be charged. The Amendment has removed the requirement to value the shares in this category.

5.  Tax Exemption - Major changes

The exemptions on exports of manufactured and agricultural goods remain in force, but an ambiguity has occurred in the Amendment regarding exemptions extended to the public sector (Iranian Government owned entities). Government owned enterprises and their shares in the private sector entities were excluded from all exemptions granted under the Tax Act.

This exclusion has been removed from the relevant texts in the Amendment. Until clarification is provided, it is not certain whether or not the government minority shares in the private sector manufacturing, mining and exports activities would enjoy the exemptions granted. 

The 50 per cent tax exemption previously granted to tourism enterprises has been extended to include five-star hotels.

6.  Losses
Losses sustained by all taxpayers engaged in trading and other activities, who are required to keep proper books of account, provided they are accepted by the tax authorities; will be carried forward and written off against future profits without any limitation.

7.  Appeals procedure
It is noteworthy to point out that the Amendment has removed the second stage of appeal process. Appeals to the High Council of Taxation could only be made on questions of non-compliance with the provisions of the Tax Act rather than questions of fact. 

8.  Official accountants
The Amendment has for the first time after 1979 reintroduced the concept of the tax audit to be undertaken by 'official accountants' and their designated firms. The taxpayer or the tax administration can choose to appoint an official accountant or a designated firm of official accountants to examine his records and report to the tax authorities.

9.  Municipal tax
This tax only applies to companies, which are subject to a municipal tax at the rate of three per cent of their taxable income.

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In recent years the Iranian Government has moved toward liberalising the banking sector, although progress has been slow. In 1994 Bank Markazi (the central bank) authorised the creation of private credit institutions, and in 1998 authorised foreign banks (many of whom had already established representative offices in Tehran) to offer full banking services in Iran's free-trade zones. The central bank sought to follow this with the recapitalisation and partial privatisation of the existing commercial banks, seeking to liberalise the sector and encourage the development of a more competitive and efficient industry.

In mid-2001 the central bank approved the first private banking applications, with three credit institutions:

  • Karafarinan
  • Saman Eqtesad
  • Construction, industry and development institutes

Private banks are required to comply with a strict supervisory system. The impact of the private banks on Iran's financial system is modest. Even by local standards, the banks are extremely small, and have been posting slow growth in their first years of operation mainly due to the central bank setting of cautious limits on their activities. For instance, their freedom to set market-determined 'interest' rates is confined by the central bank's insistence that they remain within two percentage points of those offered by the state-owned commercial banks.

In August 2004 the new conservative-dominated Majlis (parliament) rejected key articles of the fourth five-year economic plan (2005–09) that would have allowed the privatisation of existing state-owned banks. Having branded the lending practices of state-owned banking system as unfair and counterproductive during the 2005 presidential campaign, Mahmoud Ahmadinejad promised to lower interest rates once in office. After being elected in June 2005, he promptly replaced the heads of major state-owned commercial banks at the beginning of his tenure. The bank chiefs had staunchly advocated liberalisation, which Mr Ahmadinejad opposes, and some of them had openly sided with Hashemi Rafsanjani in the elections. However, Mr Ahmadinejad has faced resistance from Bank Markazi and parts of the Majlis, which argue that the lending rate cannot be lowered to less than the inflation rate.

The revolution stifled growth on the Tehran Stock Exchange (TSE), as investors either left the country or became wary of investing. After the end of the Iran-Iraq war the government reactivated the exchange as part of its commitment under the first five-year plan to sell 391 firms from the state-owned portfolio.

Operations in the equity market are not affected by Islamic law restrictions on speculation, as the purchase of stock is regarded as productive investment involving an element of risk. Commodity dealing is prohibited, as it is not viewed as productive investment under the terms of the 1983 Banking Act. A large number of other financial instruments are also banned, ranging from basic products such as mutual funds to more advanced derivative instruments. In theory, foreigners are allowed to buy shares on the bourse, but there is currently no external involvement, or interest, in the exchange. 

Since 1998 importers and exporters have also been permitted to trade foreign-exchange certificates on the bourse, creating a floating value for the rial known as the TSE rate. In 2002 the 'official' rate (IR1752:US$1) was abolished, and the TSE rate became the basis for the new unified foreign-exchange regime.

Local confidence in the market remains weak, dogged by concerns over insider trading and poorly enforced disclosure standards on listed companies. Liquidity in many shares is also weak, while the volatility of the market over the last decade has led many to invest in property rather than shares. 

State-owned funds and the bonyad play a leading role in TSE trading, a pattern that has undermined the effectiveness of the privatisation program. 

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There are no import duties applicable to product samples accompanying visitors provided that these are not deemed by customs authorities to have been imported for commercial purposes.

To facilitate later 're-export', samples of computer and hi-tech equipment should be declared at the airport and all related customs declarations duly completed.

We recommend to potential exporters intending to carry with them samples of their products to contact the Austrade office in Tehran so as to ensure that their samples do not fall under forbidden entry product categories. There is no duty charged on samples of products dispatched to Iran by air/sea or mail, provided the package weighs less than three kilograms and does not include forbidden goods. A small customs handling fee will however be charged by the Iranian customs authorities.

Give-aways and gifts accompanying visitors to Iran and destined to Iranian contacts are duty free.

Small quantities of advertising material could be brought in tax and duty free.

Iran is a signatory to the ATA Carnet Convention (see 'Guidelines', section 3.4).

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Business partners

Iranian authorities insist on a presence in the Iranian market. The stronger the local presence, the better the chances of finding the right contacts in the Iranian hierarchy and determining the ways that could facilitate the awarding of projects or purchases, although this can be difficult and things don't usually work according to the rules or defined systems. Connections or commissions play an important role in the Iranian market.

Another subtle factor lies in the appreciation that the committed players in the Iranian industry will be instrumental in settling the rules for investment. Quite apart from 'lobbying', it is through daily interaction with government bodies that rules will emerge. In addition, there is also the realisation that the Iranian Government will hold the committed players in higher esteem, than the companies perceived to be dragging their heels.

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Business travel

Domestic travel is best taken by air. There are several airlines, eg. Iran Air, Asseman Airlines, Mahan Air, Kish Air. The majority of official Austrade travel within Iran is with Iran Air, but bookings can be made with other airlines provided that travel on ageing Russian built aircraft is avoided. In general terms, aircraft and airport security is to an acceptable level. Domestic bookings cannot effectively be made abroad, however, tickets and hotels can be booked locally by Austrade Tehran. No special approvals are required for internal travel. 

At both of Tehran's international airports and most regional airports there are airport taxi services that operate at a very reasonable rate. Avoid the informal taxi drivers hanging around the exit of the airport building and preferably make use of the taxi booking counters in the airport which are usually well sign posted. Taxis do not have meters so you need to agree on a tariff before you start your journey.

Also, Austrade Tehran provides a visa/transportation/accommodation booking package which includes official transportation for airport pickup and transfer to hotel for company representatives using Austrade in-market services. The charge is A$190.

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Australians planning to travel to, or who are currently travelling in the Middle East, are urged to exercise care and monitor developments that may affect their safety through the Department of Foreign Affairs and Trade's (DFAT) current general travel advice and bulletins.

Specific travel advice on Iran is also available from DFAT. Individuals should take sensible precautions and strictly observe Islamic customs and ensure that their travel documentation, including passports and any necessary visas, for themselves and their dependents are valid and up-to-date. 

General safety advice

  • Inform Austrade that you are visiting Iran in case of any problems with security.
  • Do not carry large sums of cash with you when travelling around the city. There have been repeated instances where bogus security officials have searched and robbed visiting business officials.

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Useful websites

Islamic Republic of Iran Government -

Comprehensive business/media/culture web directory of Iran with archives:
Iran Mania -
Iran World -
Net Iran (clippings) -
Pars Times - 

Business and finance:
AME Info -
Foreign Investment Promotion and Protection Act (FIPPA) -
Iran’s Third Socio-Economic and Cultural Development Plan of 2000-2004 -
Iran Chamber of Commerce, Industries & Mines -
Statistical Centre of Iran - 
The High Council of Iran Free Trade-Industrial Zones -
World Bank Iran

Atieh Bahar Consultin - 
Iran Fair -
Islamic Republic of Iran (Customs) -

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Austrade offices

The Austrade Office operates from the Australian Embassy located in Tehran. There is also an Austrade-managed Australian Consulate-General based in Dubai in the United Arab Emirates approximately one-and-a-half hours by air from Tehran. Dubai is the major regional transit hub for the Gulf Region and for connection to intercontinental flights onward to Asia and Australia.

Australian Embassy Tehran
No. 13, 23rd Street
Khaled Islambuli Ave
PO Box 15875-4334
Tehran, Iran
Tel: (98 21) 8872 0472
Fax: (98 21) 8872 0490


Opening hours:
8.30am–4.30pm, Sunday to Wednesday
8.30am–2.45pm Thursday


The only way to get to the Austrade office/Australian Embassy in Tehran is by taxi. The taxi fare for the 30km journey from the Imam Khomeini International Airport to the office would be approximately 125,000 Rials (less than A$20.00). The cost of getting to the office from any major hotels in the city would be more than 30,000 rials (A$5.00). 


If phoning the office, it is important to use the PABX extension numbers to avoid the lengthy electronic answering programs and greetings in English and Farsi.

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Australian Embassies

The only Australian diplomatic mission in Iran is the Embassy based in Tehran. Representatives of the Australian Trade Commission (Austrade) and the Department of Immigration & Multicultural Affairs (DIMA) are also located in the Embassy.

Australian Embassy Tehran
No. 13, 23rd Street
Khaled Islambuli Ave
PO Box 15875-4334
Tehran, Iran
Tel: (98 21) 8872 4456 - 8872 0472
Fax: (98 21) 8872 0490

Opening hours:
7.30am–3.30pm, Sunday to Wednesday
7.30am–2.45pm Thursday

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