The Law on the Administration of Free -Trade Industrial Zones

In   order   to   accelerate   the implementation   of   infrastructural   and development   projects   enhance economic   growth   and   progress,   to raise the level of investment and public income, to create sound and productive employment, to regulate the labour and product   market,   to   actively   participate in regional and international markets, to produce   and   to   export   industrial   andprocessed goods and to provide public services.   The   government   hereby authorized  to  administer   as   free   tradand industrial zones, the following area accordance   with   established   law   and the present law:

(a) Kish Island Free Zone

(b)   Qeshm   Free   Zone,   a   contiguous area   not   exceeding   there   hundred square   Kilometers   situated   at northeastern  part   of   the   Island   whose boundaries  shall  be  determined  by  the

Council of Ministers.

(c) Chabahar Free Zone

Note   ۱:   Free   Zone   shall   benefit   from the facilities and privileges provided by this law.

Note   ۲:   The   establishment   of   new Zones   and   the   delineation   of   their boundaries   shall   be   subject   to   the proposal   by   the   government   and ratification  by   the   Islamic   Consultative

Article 2

The   revenues   of   the   Adminstrative Authorities   of   Free   Zones   should   be spent   solely   within   the   framework   of the annual budgets as approved by the Council of Minsters. Assistance to be   granted   by   the   Administrative Authorities   for   the   reconstruction   and development   of   other   areas   (with  the priority   to   be   granted   to   adjacent areas)   shall   be   provided   solely   uponapproval   by   the   Council   of   Ministers;any   other   assistance   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   IslamicRepublic of Iran.

Zone: Free Trade – Industrial Zones.

Authority:   Authority  responsible  for   the administration   of   each   Free   Trade   -Industrial Zone.

Majlis:   The   Islamic   Consultative

Section Three: Functions

Article 4

The Council of Ministers is responsible for:

  1. a) Approval of regulations coordination of all Activities of each Zone.
  2. b) Approval of   the   charter   of   the authority   and   companies   affiliated thereto.
  3. c) Approval of the annual development, cultural programmes and budgets, and project financial operations of the Zone

Authorities.

  1. d) Upon confirmation  by   the   superme commander   of   the   Armed   Forces, approval   of   the   security   and   law enforcement regulationd of the Zones.

Article 5

Each Zone shall be administered by an Authority organized as a 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  basis  of   the  present   law and   its   respective   by   –   laws,   withrespect   to   cases   not   provided   in  this law and charter, these companies shall be subject to the Commercial Code.

Article 6

The Authority shall  be  administered by a   Board   of   Directors,   consisting   of there or  five persons.  Members  of  the board   of   directors   shall   be   appointed by   the   council   of   ministers.   The managing  director   who  shall  be the  ex officio  chairman  of   the  board,   shall  beappointed   by   Persidential   from amongst the Members of the Board of Directors   and   shall   be   highest executive   authority   in   the   affairs   of economy   and   infrastructure   in   the Zone.   The   Managing   Director   and   the Members   of   the   Board   of   Directors shall be appointed for a tenure of there years   and   their   reappointment   is permissible.

Dismissal   from   the   office   of   the Managing   Director   and   the   Board Members   rests   with   the   same appointing   authorities.   The responsibility   for   and   the   power   of general meeting of each Zone Authority is vested with Council of Ministers.

Article 7

Upon   approval   by   the   Council   of Ministers, the Authority of each Zone is empowered   to   set   up,   as   deemed necessary,   companies   which   shall   be established   in   accordance   with   the

established   in   accordance   with   the provisions of 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 natural   or   foreign   investors   for   the implementation   of   development   and productive   projects,   with   the observance   of   the   stipulations   of   the Constitution.   Disputes   and   claims

arising  out   of   the  concluded  contracts, shall   be   examined   and   settled   on accordance   with   the   mutual agreements   and   the   contractual commitments   of   both   parties concerned.

Article 9

Upon   approval   by   the   Council   of Ministers,   the  Authority  of   each  Zones is   empowered  to  collect   charges  from natural  or  legal persons residing in the Zone in return for porvision of municipal services   and   communications,   health, cultural,   educational   and   welfare facilities.

Article 10

Issuance   of   permits   for   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 natural   or   legal   person,   within   the boundaries   of   the   Zone,   rests   solely with the Authority.

Article 11

Regulations  governing  the  employment of manpower, social insurance security the   issuance   of   entry   visa   to   foreign national, shall be based on rules which are   to   be   approved   by   the   Conucil  of are   to   be   approved   by   the   Conucil  ofMinisters.

Article 12

Natural   and   legal   persons   engaged   in any   kind   of   economics   activity   in   a Zone   are   exempt   from   payment   of invoice   and   property   tax   as   from   the date   of   the   commencement   of   the operation  mentioned  in  the  permit   with respect   to   any   type   of   economic activity   in   Free   Zone,   and   after   the lapse   of   fifteen  years   shall  be  subjectto the regulations to be enacted by the Majlis, upon proposal by the Council of Ministers.

Article 13

Exchange of goods between the Zones and   outside   the   country   is   excluded from   the   provisions   of   the   Export   -Import   Regulations   after   being registered   at   the   customs   office.Regulations   governing   the   export   and import   of   goods   and   customs formalities   with   each   Zone   shall   be approved   by   the   Council   of   Ministers. Exchange of goods between the Zones and the rest of the country, whether of commercial   nature   or   by   travelers   is governed   by   the   general   Export   -Import Regulations of the country.

Article 14

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   duties   and   commercial benefit   tax   up   to   the   added   value thereof   in  the  Zone,   upon  approval  by the Council of Ministers.

Article 15

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 duties   and   commercial   benefit   tax relating to the respective domestic raw materials.

Article 16

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 17

Rules   and   Regulations   on   monetary and   banking   operations   and transactions   conducted   in   the   Zones shall  be  drawn  up  by   Central  Bank   of Islamic   Republic   of   Iran   within   there months after the ratification of this law, with   the   aim   of   safeguarding   the competitiveness   of   a  Zone  vis  -a  –   vis  free Zones of other countries and shall be   approved   by   the   Council   of Ministers.

Note   ۱:   The   Free   Zone’s   Foreign exchange   system   and   equivalency   of Iranian  Rial   against   to   exchanges   will be   determined   with   regards   to   the Article 6 of the “Law Concer Execution of   Governmental  Punishment”  Pertaing to   the”   Goods   and   Foreign   Exchang Smuggling Law. “

Note   ۲:   Establishment   of   the   Iranian bank   with   minimum   of   ۵۱   %

government shares, setting any foreign bank   branch   establishment   of   non   -banking   credit   institutions   whether Iranian   or   Foreginer   or   setting   up   of their branches in the Free Zones, shall be   effected   upon   suggestion   of   the Zone   Authority   and   Central   Bank   for approval the Board of Ministers.

Note 3: The branches of foreign bankslocated   in  the   Free   Zones,   and   thosegroup   of   the   Iranian  banks   authorizedby the Central Bank of Islamic Republicof   Iran   to   have   activities   in   the   FreeZones   can   perform   offshore   banking Zones   can   perform   offshore   banking

activities in accordance with the Islamic banking   activities   in   accordance   with the   Islamic   banking   principles   andcriteria   decreed   by   the   Board   of Ministers.

Article 18

Upon   approval   by   the   Council   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 implementing   of   infrastructural   and

productive projects. Repayment   of   these  credits   shall  take place   only   through   drawing   on

revenues of the Zone concerned.

Article 19

Inflow   and   outflow   of   capital   and expatriation   of   profits   generated   byeconomic   activities   in   each   Zone   are permitted.   The   required   regulation  for 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 Council of Ministers.

Article 20

Upon   approval   by   the   Council   of Ministers, the Authority of each Zone is empowered   to   guarantee   foreign investments   against   losses   from expropriation  and  nationalization,   up  to the   ceiling   of   the   commitments contained   in  the   respective   contracts, by   utilizing   its   own  assets   or   through contracts   concluded   with   the   bank, credit   institutions   and   insurance companies.

Article 21

In   compliance   with   Article   ۸۱   of   the constitution  and  rules  approved  by  the Council of Ministers, the registration of companies   and   industrial   and companies   and   industrial   and intellectual   property,   as   well   as   the registration   of   ships,   vessels   and aircrafts in each Zone, can be effected.

Article 22

The   Authority   is   entitled   to   open representative   offices   wherever deemed necessary.

Article 23

Utitization   of   land   and   national resources belonging to the government within each Zone and the sale or lease thereof   to   Iranian   nationals   shall   be determined by regulations as approved by the Council of Ministers and with the development   plans   of   each  Zone.   The Authority   of   each   Zone   shall   be responsible   for   the   enforcement   of relevant regulations.

Note   ۱:   Renting   of   land   to   foreign nationals   is   permitted   but   its   sale thereto is strictly forbidden.

Note 2:  Iranians  residing in the  islands subject   of   Free   Zones   shall   enjoy   the same   rights   of   ownership   of   the   land and   improvements   thereto   as   the   rest of the country. The   registry   of   Deeds   and   Properties Organization   is   obliged   to   issue   title deeds to individuals in accordance with laws and regulations.

Article 24

The   president   and   directors   of   each Zone authority, managing directors and board   members   of   affiliated companies,   all   the   ministers   and   the heads   of   government   organizations, heads  of  the  judiciary power, the chief of   state   inspectorate,   their   respective deputies and advisors, Members of the Majles,   governor   –   generals,   mayors and  hteir  deputies  and their  respective first degree erlatives are not authorized first degree erlatives are not authorized to hold share in companies established by   a   Zone   Authority   as   well   as   in private   companies   operating   in   the Zones.

Article 25

The by – laws for implementation of thisLaw   shall  be  approved  by   the  Council of Ministers.

Article 26

In  order   to   cordinate   the   activities   of the  Free  Zones,  and  as the case  may be,   and   with   the   approval   of   the competent   minister,   one   of   the following   two   procedures   may   be adopted:

  1. a) The executive organization (affiliated to the executive   branch)   may   transfer their   authority   to   the   Chairman   and Managing   Ditector   of   the   Free   Zone Organization.
  2. b) Officers of   the   executive organization   functioning   in   various capacities   in   the   Zone   shall   be appointed   by   the   proposal   of   the Chairman  and   Managing   Director   and the approval of the competent authotity in the executive organization.