Branch and Representative Offices (Part ΙΙ)

Branch and Representative Offices (Part ΙΙ)

Branch and Representative Offices (Part ΙΙ)

Branch and Representative Offices (Part ΙΙ)


5. Permitted Activities

5-1. Supply of After-Sales Services

In cases where foreign companies supply goods or services to Iranian subjects, said companies may apply for registration of their branches or representative offices in Iran for the supply of after-sales (guarantee and warranty) services in Iran.

5-2. Carrying out Executive Works

Foreign companies, being parties to contracts concluded with Iranian subjects (Iranian natural persons and legal entities of private and public sectors), may require that their branches or representative offices be registered in Iran.

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Companies and Corporations Law

5-3. Investigating Investments in Iran

It must be first noted that those foreign companies wishing to make an investment in Iran may take any one of the following two actions:

  •  Investing within the framework of the FIPPA with authorization granted by the Organization for Investment and Economic and Technical Assistance and approval by the Council of Ministers, which shall be granted on a case-by-case basis after submitting the required documents.
  •  Entering into joint ventures directly with Iranian natural persons and legal entities by creating a joint venture company or by making an investment in an already existing joint venture company.
  •  Foreign companies may set up branches or representative offices in order to conduct due diligences and prepare grounds for investment by using any one of the above two methods.

5-4. Cooperation for Projects in a Third Country

In cases where Iranian technical and engineering companies have been designated to carry out industrial, technical, development, and other activities in a third country and for such purpose, agreements shall be concluded by and between the Iranian company and companies from other countries.

The foreign company, being party to such agreements, may set up a branch or representative office of its company in Iran by submitting the required documents. Also, in the case where a foreign company, designated to carry out a technical or engineering work in a third country, wishes to carry out such work, through a joint venture with an Iranian technical and engineering company, it may set up its branch or representative office in Iran.

After-Sales Service

5-5. Export and Technology Transfer

The following foreign companies contributing to export increases and technology transfers may register a branch or representative office of their company in Iran:

  •  Foreign companies operating in the field of and contributing to development and increase of exports of Iranian non-oil products, including industrial and agricultural products and handicrafts
  •  Foreign companies transferring know-how on production of various products to Iranian nationals
  •  Foreign companies possessing the technology in respect of industrial products that intend to transfer the technology for the production of the said products to Iranian nationals by setting up factories and plants.

5-6. Activities that require a Permission

Foreign companies that have entered into a contract with a government body to supply services in various fields that require a permission to be issued by a government organization may register a branch or representative office of their companies in Iran.

Foreign companies operating in many other fields shall require permission from the pertinent organizations to carry out business in Iran. E.g. offering services in the fields of transportation at sea, on land (road and rail) and by air all require permission from the Organization for Transportation and Terminals. Also, operation in the field of banking requires permission from the Central Bank of the Islamic Republic of Iran.

Representative Office

6. Responsibilities of Representative and Branch Office of Foreign Companies

  1.  Winding up and liquidation of the representative and branch office in case of revocation of the permission granted to the foreign company to operate in Iran.
  2.  Submission of the annual report on the activities of the head office comprising of fiscal statements audited by independent auditors in the company’s country of origin, to the authority concerned in Iran.
  3. Submission of the activity report of the branch or representative office in Iran together with the audited fiscal statements within four (4) months after expiry of the fiscal year, to the authority concerned in Iran.
  4.  Management and running the affairs of the branch or representative office by one or more natural person(s) domiciled in Iran.

7. Tax Applicable to the Representative & Branches of Foreign Companies in Iran

Representatives and branches of foreign companies in Iran, that are working for the parent company, to gather economical information and data as well as marketing, without the right to carry out transactions, and receive money from the parent company to compensate for their expenses, shall not be subject to income tax. Note 3 of Article 107 of the Direct Taxation Law illustrates this more clearly:

Branch Office

Note 3: “The branches and representative offices of foreign companies and banks in Iran which shall proceed to render activities for marketing and gathering of economic data and information in Iran for the holding company, without having the right to enter into a transaction in Iran, and which shall collect amounts from the holding company in order to meet the expenses and its financial requirements, shall not be liable to income tax.”

8. Costs

The following charges and fees will be incurred in connection with the formation of the representative or branch Office:

  1.  Registration fee, payable to the Companies Registration Office.
  2.  Charges for publication in the Official Gazette of the notice of registration payable to the Official Gazette at current rates.
  3.  Charges for publication in a general circulation newspaper at current rates.
  4.  Stamp taxes on share certificates
  5.  Professional Fee which is usually charged by lawyers

Our team is composed of highly skilled and versatile lawyers who combine practical experience and academic knowledge of their field. Most of our practitioners have worked in different professional environments, often outside their home jurisdiction.

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