What is Foreign Capital?
Various types of capital, whether in cash and/or non-cash (in kind), imported into the Country by the Foreign Investor, and comprising the following:
a) Cash funds in the form of convertible currency, imported into the Country through the banking system or other methods of transfer acceptable to the Central Bank of the Islamic Republic of Iran;
b) Machinery and equipments;
c) Tools and spares, CKD parts and raw, addable and auxiliary materials;
d) Patent rights, technical know-how, trade marks and names, and specialized services;
e) Transferable dividends of foreign investors;
f) Other permissible items approved by the Council of Ministers.
Provisions for Importation, Valuation and Registration of Foreign Capital
Foreign Capital may be imported into the Country by way of one or a combination of the following manners, to be covered under this Act:
a) Cash funds to be converted into Rials;
b) Cash funds not to be converted into Rials but to be used directly for the purchases and orders related to Foreign Investment;
c) Non-cash items, after valuation by the competent authorities.
The procedure related to the manner of valuation, and registration of Foreign Capital
The procedure relating to the importation, valuation and registration of Foreign Capital, being cash or non-cash (in kind), is set forth as follows:
a. Capital in cash
1. Cash funds in foreign exchange referred to in Para (a) of Article (11) of FIPPA imported into the Country in one or several stages with the intention to be converted into Rials, shall, on the date of conversion into Rials and in accordance with the certificate of the bank, be registered by the Organization in the name of the Foreign Investor, and shall be covered by FIPPA. The Rial equivalent of the foreign currency imported shall be deposited in the account of the Investee Firm or in the account of the investment project.
2. Cash funds in foreign exchange referred to in Para (b) of Article (11) of FIPPA imported into the Country in one or several stages but not converted into Rials, shall be deposited in the foreign exchange account of the Investee Firm or in the account of the investment project. These funds, as from the date of deposit, shall be registered in the name of the Foreign Investor, and shall be covered by FIPPA. The said funds may, under the supervision and confirmation of the Organization, be used for foreign purchases and orders related to the Foreign Investment.
Note: The Country’s Official Monetary Network is required, in relation to the foreign exchange transfer-drafts of Foreign Investors, to certify directly to the Organization the details of the draft including the name of the transferor, the amount of the foreign exchange, the type of the foreign exchange, the date of receipt, the date of conversion, the name of the Investee Firm, and, in case of conversion into Rials, the Rial equivalent of the foreign exchange imported.
b. Capital in kind (non-cash)
Foreign Capital in-kind includes those items mentioned in Paras (b), (c) and (d) under the definition of the term Foreign Capital in Article (1) of FIPPA for which the procedure for importation, valuation and registration is set out as follows:
1. With respect to the Foreign Capital in-kind referred to in Paras (b) and (c) above (including machinery, equipments, tools and spares, CKD parts, raw, addable and auxiliary materials), the Ministry of Commerce, after being notified of the Organization’s agreement with the importation of the non-cash Foreign Capital items, shall proceed with the statistical registration of the order and communicate the issue to the relevant customs office for the purpose of valuation and release of the imported items.
The Customs’ valuation on the value of the imported items shall be considered as the acceptable valuation, and, upon the request of the investor, the value stated in the import license plus the transportation and insurance expenses, shall be registered in the name of the Foreign Investor, and shall be covered by FIPPA as from the date of release from the Customs. In case of discrepancy between the Customs’ valuation and the price stated in the detailed list (of the non-cash items) approved by the Board, the Customs’ valuation shall be the basis for registration of the Foreign Capital in the Organization and the General Directorate for Registration of Companies and Industrial Property.
Note 1. The Ministry of Commerce and the Organization are required to take measures, within a period of one month from the date of official notification of these Regulations, for the preparation of a special form for the statistical registration of orders of the non-cash Foreign Capital items under this paragraph, and to act accordingly.
Note 2. The Customs of the Islamic Republic of Iran is required to assess the value of the second-hand machinery and equipments related to Foreign Investments at second-hand price.
Note 3. If, by finding, the non-cash Foreign Capital imported into the Country is defective, mutilated, not usable and/or does not conform with the specifications declared in the list approved by the Board, the matter will be brought before the Board, and that part of the value of the imported goods which is not confirmed by the Board shall be deducted from the account of the imported capital.
2. With respect to capital items referred to in Para (d) of Article (1) of FIPPA (including patent, know-how, trade names and marks, and specialized services), the Organization, after carrying out the necessary investigations, shall submit to the Board a report on the fulfillment of the contractual undertakings under the technology and service agreements, and the approved sums shall be registered by the Board as Foreign Capital and shall be covered by FIPPA within the framework of a directive to be drafted by the Board and approved by the Minister of Economic Affairs and Finance.