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.
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.
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)
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.