In this document we have tried to provide a snapshot of Islamic Republic of Iran in terms of its political, governmental and economical aspects with the objective of bringing our clients closer to it. Users of this document should be aware that all information and suggestions in this document are compiled from various resources and Peris-Scope Management Consultancy Ltd. own knowledge with the goodwill of providing a basic introduction to Islamic Republic of Iran with the most accurate knowledge to our belief. Peris-Scope Management Consultancy can not be held liable for any outcome of the use of the information and recommendations shared in this document.
ISLAMIC REPUBLIC OF IRAN (Jomhuri ye Eslāmi ye Irān)
“Iran, in its former incarnation as Persia, created the world’s first empire, produced titanic figures like Cyrus, Darius, and Xerxes, and is one of the great fonts of world culture”. Stephen Kinzer.
With the recent global political developments and the sanctions being lifted up, Islamic Republic of Iran is truly one of the rarest un-tapped opportunities in the world with a strong economic power and a well educated population. “An Iran specialist Dominic Bokor-Ingram of Charlemagne Capital commented that Iran can grow its GDP at 6-8 per cent for the foreseeable future. It has all the things it needs to do so. Certainly, sanctions have left plenty of spare capacity — Iran currently uses only 42 per cent of its generating capacity. It has the right sort of population. It has very low debt: net government debt to GDP is a mere 4 per cent and its companies and consumers are all but debt free too (FT.com- Merryn Somerset Webb).
Key Facts about Iran
Islamic Republic of Iran is a sovereign state in Western Asia and home to one of the world’s oldest civilizations dating back to 4000 B.C. comprising a land area of 1,648,195 km2 (636,372 sq mi), it is the second-largest country in the Middle East and the 18th-largest in the world. With 75.1 million population (According to 2011 Census results by www.amar.org.ir and as of 2014 it is estimated around 80,8 Million), Iran is the world’s 17th most-populous country. Iran has one of the highest literacy rates within Middle East with 92.4%, with more than 10 Million with a high level education.
Iran has a diverse population, Persians making up 61% of total followed by Azeri’s at 16%, Kurds at 10%, Lur at 6%, Baloch 2%, Arab 2%, Turkmen and Turkic tribes 2%, and others 1%. Official Language in Iran is Persian which is spoken by almost every individual in the country, but due to the diversity of the population several other languages are being spoken, main ones being Azeri Turkish, Kurdish, Luri, Mazandari, Baluchi and Arabic. In past decades, English has been widely taught in schools enabling younger generations to have high level of English speaking abilities.
Islam is the dominant religion in Iran at 98% (Shia 89% and Sunni 9%). Other religions, such as Zoroastrianism, Judaism, Christianity, and the Baha’i faith make up the remaining 2%.
REGIONS PROVINCES & CITIES
Iran is divided into five regions with thirty one provinces (ostān), each governed by an appointed governor (ostāndār). The provinces are divided into counties (shahrestān), and subdivided into districts (bakhsh) and sub-districts (dehestān).
Tehran, with a population of around 8.1 million (2011 census), is the capital and largest city in Iran. It is an economical and cultural center in Iran, and is the hub of the country’s communication and transport network.
The country’s second largest city, Mashhad, has a population of around 2.7 million (2011 census). It is the capital of Khorasan Razavi Province , and is a holy city in Shia Islam, as it is the site of the Imam Reza Shrine. About 15 to 20 million pilgrims visit the Shrine of Imam Reza every year.
Isfahan, with a population of around 1.7 million (2011 census), is Iran’s third largest city and the capital of Isfahan Province. It was also a former capital of Iran, and contains a wide variety of historical sites; including the famous Image of the World Square, Siose Bridge, and the sites at the Armenian district of New Jolfa.
CALENDAR & HOLIDAYS:
The Persian Calendar (SHAMSI) is the official Iranian calendar that is solar based with the starting point being the Prophet Mohammad’s emigration to Medina. The Persian new year starts with the Vernal Equinox (usually the 21st of March in Gregorian Calendar) and has 12 months. Iran is currently at year 1395 since 21st March 2016.
2016/17 Public Holidays:
11 February 2016 – Anniversary of Islamic Revolution.
13 March 2016 – Martyrdom of Hazrat Fatimah
19 March 2016 – Oil Nationalization Day
20-23 March 2016 – Noruz (Iranian New Year)
31 March 2016 – Islamic Republic Day
1 April 2016 – Nature Day
21 April 2016 – Imam Ali’s Birthday
5 May 2016 – The Prophet’s Ascention
22 May 2016 – Imam Mahdi’s Birthday
3 June 2016 – Demise of Imam Khomeini
4 June 2016 – National Uprising
27 June 2016 – Martyrdom of Imam Ali
6-7 July 2016 – Eid Al Fitr
30 Jul 2016 – Martyrdom of Imam Sadiq
12 September 2016 – Eid Al Adha
20 September 2016 – Eid Al Ghadir
11 October 2016 – Tassoua
12 October 2016 – Ashura
20 November 2016 – Arbaeen
30 November 2016 – Martyrdom of Imam Reza
10 December 2016 – Birthday of Prophet Mohammad
10 February 2017 – Anniversary of Islamic Revolution
2 March 2017 – Martyrdom of Hazrat Fatimah
19 March 2017 – Oil Nationalization Day
21-24 March 2017 – Noruz (Iranian New Year)
1 April 2017 – Islamic Republic Day
2 April 2017 – Nature Day
11 April 2017 – Imam Ali’s Birthday
25 April 2017 – The Prophet’s Ascention
12 May 2017 – Imam Mahdi’s Birthday
4 June 2017 – Demise of Imam Khomeini
5 June 2017 – National Uprising
16 June 2017 – Martyrdom of Imam Ali
26-27 June 2017 – Eid Al Fitr
20 Jul 2017 – Martyrdom of Imam Sadiq
1 September 2017 – Eid Al Adha
9 September 2017 – Eid Al Ghadir
30 September 2017 – Tassoua
1 October 2017 – Ashura
10 November 2017 – Arbaeen
19 November 2017 – Martyrdom of Imam Reza
6 December 2017 – Birthday of Prophet Mohammad
CLIMATE: Iran has a climate of presenting the 4 seasons ranging from subtropical to sub-polar, due to the extreme variations in altitude and rainfall throughout the country. It has long and hot summers and short and cool winters. In North West during winter, the temperature is usually below 0oC, and in the Southern Coast in summer time raises above 40oC with a significant humidity.
ECONOMIC SUMMARY: According to the www.tradingeconomics.com, the GDP of Iran was worth 42.33 Billion USD in 2014, representing 0.64% of total world economy. The biggest sector of Iran’s economy are services, counting 51% of the GDP followed by Oil production with 23%, Manufacturing and mining makes 13% and agriculture 10%. GDP per capita is estimated at 2949,3 USD (15.572 USD at PPP). According to the World Bank data, Iran is ranked 119th in terms of ease of doing business with a significant improvement from 152nd in 2013, indicating a strong positive trend, but still emphasizes the importance of having the right partner and support to succeed in this market. Iran is ranked as the 74th most competitive nation reported by World Economic Forum despite the economic sanctions which was in place until recently, and providing a significant improvement opportunity for future. According to the Statistical Centre of Iran, there are 22 Million employed people in Q4 2015 with an unemployment rate of 10.7%.
The politics of Iran take place in a framework of a theocracy in a format of syncretic politics that is guided by an Islamist ideology. The December 1979 constitution, and its 1989 amendment, define the political, economic, and social order of the Islamic Republic of Iran, declaring that Shi’a Islam of the Twelver school of thought is Iran’s official religion.
Iran has an elected president, parliament (or Majlis), “Assembly of Experts” (which elects the Supreme Leader), and local councils.
Supreme Leader: The Supreme Leader is the Head of the State and the most powerful office in the Islamic Republic of Iran with some executive powers related to Defense, Religious Affairs and Guardian Council. The Supreme Leader is appointed and supervised by Assembly of Experts. According to the Iranian constitution, the Supreme Leader asserts the authority of the president, he can veto the laws made by the parliament and legally he permits for presidential candidates to proclaim their candidacy. Today, Islamic Republic of Iran Supreme leader is Ayatollah Ali Khamenei, who has succeeded the 1st Supreme Leader and the founder of Islamic Republic of Iran, Ayatollah Ruhollah Khomenei.
President: The Iranian constitution defines the President as the highest state of authority after the Supreme Leader, and is elected by the nation for a term of 4 years. Presidential candidates must be approved by the Council of Guardians prior to running, and after being elected is appointed by the Supreme Leader. The President is responsible for the implementation of the Constitution and for the exercise of the executive powers, except for matters directly related to the Supreme Leader. The President appoints and supervises the Council of Ministers, coordinates government decisions and selects government policies to be placed before the legislature. Currently, Hassan Rouhani is the President of Islamic Republic of Iran, replacing Mahmoud Ahmedinejad in 2013.
Parliament: The parliament of Iran (Majlis) comprises 290 members elected for 4 year terms. The parliament drafts legislations, ratifies international treaties and approves the national budget. All parliament candidates and legislation from the assembly must be approved by the Council of Guardians.
Guardian Council: The Guardian Council is composed of 12 jurists, including six clerics appointed by the Supreme Leader, and six jurists elected by the Parliament, from among the Muslim jurists nominated by the Head of the Judicial System. The Council interprets the constitution and may reject bills from parliament deemed incompatible with the constitution or Sharia.
Expediency Council: The Expediency Council has the authority to mediate disputes between the Parliament and the Guardian Council and serves as an advisory body to the Supreme Leader. Its members include heads of the three government branches, the clerical members of the Guardian Council and various other members appointed by the Supreme Leader for 3 year terms.
Judicial Branch: The Supreme Leader appoints the head of Judiciary, who in turn appoints the head of the Supreme Court and the Chief Public Prosecutor. There are several types of courts including public courts that deal with civil and criminal cases, and “revolutionary courts” which deal with certain categories of offenses, including crimes against national security.
TYPES OF TAXES IN ISLAMIC REPUBLIC OF IRAN
- Income tax
- Islamic tax
- Real estate tax
- Capital gains tax
- Corporate Income tax
- Indirect taxes
- Income Tax: There are five categories of income earned by individuals (Salaries, Income from profession, Incidental Earnings, Real Estate Income, Income Earned from Agriculture). Each category is taxed separately and has its own computation rules. Individuals of Iranian nationality resident in Iran are subject to tax on all their income whether earned in Iran or abroad. Foreign nationals working in Iran are also subject to the same income tax based on their salary. Non-resident individuals are liable to pay tax only on their Iranian-sourced income.
- Islamic Tax: In addition to the mandatory taxes, as of 2007, Islamic taxes are collected on a voluntary basis. These include an individual’s income tax (Arabic khums, “one-fifth”); an alms-tax (zakat), which has a variable rate and benefits charitable causes; and a land tax (kharaj), the rate of which is based on the principle of one-tenth (ushr) of the value of crops, unless the land is tax-exempt.
- Real Estate Tax: Rental income is subject to real estate income tax in Iran. The net income, which is 75% of the gross rent, is then subject to a tax calculated at maximum 35%.
- Capital Gains Tax: The Capital gains tax mainly applies to the financial market transactions, but there is no capital gains tax on the sale of the real estate in Iran. There are various tax rates applied to the financial market transactions like dividend income, shares and stock transactions.
- Corporate Income Tax: A flat 25% corporate tax is payable on the profits of corporate commercial entities, and a 0.3% Chamber of Commerce tax is applicable. All foreign investors doing business in Iran or deriving income from sources in Iran are subject to taxation, however depending on the type of activity the foreign investors are engaged in, various exemptions are applicable. The below chart provides an example of different Tax advantages, according to the Foreign Investment Promotion and Protection Act. (FIPPA)
Tax holidays through enactment of FIPPA
||Level of Exemption
||Duration of Exemption
||No Time Limit
|Industry and Mining
|Industry and Mining in Less-Developed Areas
||No Time Limit
||No Time Limit
There are also location requirements for tax exemption according to the investments location proximity to major cities like Tehran, Isfahan or center of provinces.
As of 2014 the following countries have a double taxation avoidance agreement with Islamic Republic of Iran:
Algeria, Austria, Azerbaijan, Bahrain, Belarus, Bulgaria, China, Croatia, France, Georgia, Germany, Indonesia, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Malaysia, Oman, Pakistan, Poland, Qatar, Romania, Russia, Serbia, South Africa, South Korea, Spain, Sri Lanka, Sudan, Switzerland, Syria, Tajikistan, Tunisia, Turkey, Turkmenistan, Ukraine, Uzbekistan, Venezuela.
According to the tax act, the source of income for foreign companies in Iran are divided into 3 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.
6) Indirect Tax (VAT): All companies engaged in supply of goods and services or in exports and imports is subject to the provision of the VAT law and all taxable companies must register themselves for VAT (with the exception of non-resident companies) and file their VAT accounts on quarterly basis. The VAT flat rate is 9%, with exceptions on supply or importation of various categories (including but not limited to; unprocessed agricultural foods, livestock, animal and poultry feed, bakery flour, sugar, rice, cereals, milk, cheese, vegetable oil, books, notebooks, donation products to ministries, medicines and medical products, transportation services, hand made carpets, all types of research and educational services, aeronautical and navigation equipment).
VISITING IRAN: Whether you go to Iran for business or for pleasure, your first destination will obviously be Tehran, which is the capital city and the economic center of the country. It is a cosmopolitan city with great museums, parks, restaurants and warm friendly people. The city is located at the south end of the Alborz mountain in a wide valley, while the northern part being the modern and rich, whereas the South part is the more traditional, poorer including lot of the industrial zones. The main Airport “Imam Khomeini” is located 55km of the southwest of city center of which most of the international flights arrive. In order to avoid bad surprises, we would suggest you to take the official taxi’s from the airport which would cost a flat rate around (25USD) to the City Center.
Before arranging your travel, it is recommended to check if your nationality requires a visa permit before entry.
If you have a valid visa, you should not expect any difficulties with the Iran Border Agency. After landing to Iran, all visitors are expected to respect the Islamic dress codes (For Men, no short pants or extreme short sleeve and tight shirts, or Women head and hair must be covered with a scarf and a loose top must be warn to cover the body). There are certain items that you will not be allowed to bring in Iran while travelling, some of the highlights being any type of alcohol (including liquor chocolates), bacon, porn and uncensored movies.
Esfahan: The major tourist attraction both for locals and foreign visitors in Iran. It is located about 340 kilometers south of Tehran, and is the capital city of Esfahan province. The Naghsh-e Jahan Square in Isfahan is one of the largest city squares in the world and an outstanding example of Iranian and Islamic architecture. It has been designated by UNESCO as a World Heritage Site. The city also has a wide variety of historic monuments and is known for the paintings, history and architecture.
Persepolis: is at 60km northeast of the city of Shiraz, which means The City of Persia, and the earliest remains date back to 515 BC. It is one of the most popular historic sites in Iran. Its ruins are declared as a World Heritage site by UNESCO.
Mashad: Iran’s second biggest city and the capital city of Khorasan Razavi province. It is located in the north east of the country. It is a holy city for the Iranian nation with Imam Reza’s shrine and every year millions of pilgrims visit this place.
IRANIAN CUISINE: Iranian cuisine is a very rich one with various influences from the history and the neighboring cultures. It includes a wide variety of foods with combination of rice, meat, fish, vegetables. We can say, when you visit Iran you will never skip a Chelow Kabab (rice served with roasted meat), but you also need to taste the different stews (Khorest) like Ghayme, Sabzi, Bademin and Lobia. Ash (a thick soup) or Kuku Sabzi (vegetable suffle).
Tehran offers a wide range of restaurants which are serving the local dishes as well as the International ones. Here are some of our picks that you can enjoy during your Tehran visit:
Shandiz Mashad (Traditional Meat Restaurant): 31 Saba Boulevade | Off Africa Street, North Tehran, Tehran, Iran +98 21 204 3775
Alborz Restaurant (Kebab Dishes): Tehran, Daroos, Shariati, No. 1597, +98 21 2260 1651
Divan Restaurant (Fusion Persian): Fayazi Blvd (Fereshteh), Sam Center | 8th floor, Tehran +98 21-22653853
Monsoon (Asian): No 8 Gandhi Shopping Center | 4th Street and Gandhi Ave, Tehran, +98 21- 88791982
Taj Mahal: (Indian):152 Boul. Bois Francs Sud, Tehran G6P 4S3, Iran. +98 21 8803 5444
WHERE TO STAY?
Parsian Esteglal Hotel: is the biggest 5 star hotel in Tehran. Vali-e-Asr St, Chamran High Way +98 21 – 22660011)
Parsian Azadi Hotel: One of the oldest 5 star hotels in Tehran located in the North part of the city. Yadegare-Imam Cross Road, Chamran Highway, Tehran. +98 21 – 2234 4444
Melal Group: offers a wide range of choices within Tehran with modern and comfortable set-up. No. 11, Salour, Hesabi Cross Road, Bosni Herzegovin St. Fereshte (Fayazi) St., Elahiyeh, Tehran. Tel: +98 21 – 2224 5090-1
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