Establishment of free zones in Iran economy was first put forward as an attempt to circumvent the centralized public economy of Iran.
They were formally established in 1993 by the act on “Administration of Free industrial and Trade Zones in Islamic Republic of Iran”. Article 1 explains the main purpose of this act as “expediting realization of infrastructures, reconstructions, economic growth and development, investment, increase in public revenue, development of employment, regulating the good and job market, active presence in international and regional markets, production and exportation of industrial goods and offering public services.
Especially with regard to investment, as one of the goals in the above Act, FZEs have been established to provide additional investment incentives for foreign investors.
Most Important Benefits of Setting up Business in FTZs
Generally, the bureaucratic procedure of registering a foreign investment is lengthier in the mainland than in FTZ . Some other benefits and incentives of FTZ are listed below:
1-Tax exemption for 20 years from the date of operation for all economic activities
2-Foreign investment and nearly a hundred percent of the amount invested.
3- Freedom of entry and exit of capital and profits
4- Protection and guarantees for foreign investments.
5- Abolition of entry visas and easily issue of residence permits for foreigners.
6-Facilitated regulation on labor relations, employment and social security.
7- Transfer of part manufactured goods to the mainland without paying customs duties.
8- Elimination of pay customs duties on imports from outside to the region and vice versa.
9- Employing trained and skilled manpower in all different skill levels and professions.
10- Utilization of raw materials, oil and gas as feedstock and fuel for all industrial activities.
Some Benefits May Not Apply
However, a foreign company, when deciding whether to set up its business in FTZs, shall always be aware whether it can actually benefit from these advantages. For example, a company registered in FTZ but having projects in the mainland is always subject to taxes for that part of its business occurring outside FTZ.
Any customs exemption are also for goods entering the Free Zone and remaining there. So if goods are supposed to be used in Tehran, it does not make any change if they are imported from free zone custom region.
List of FTZs in Iran
1-Qeshm Trade-Industrial Free Zone
2-Chabahar Trade-Industrial Free Zone
3-Aras Trade-Industrial Free Zone
4-Anzali Trade-Industrial Free Zone
5-Arvand Trade-Industrial Free Zone
6-Kish Trade-Industrial Free Zone
7-Maku Trade-Industrial Free Zone