The Islamic Republic of Iran nee Persia is a Middle-Eastern country neighbored by Pakistan, Azerbaijan, Armenia, Afghanistan, Turkmenistan, Iraq, and Turkey. The population of the country is estimated to be 83 million as of 2022 with Tehran as its largest city and the country’s capital.
Iran is an ancient country with thousands of years of cultural heritage and history. The people of Iran pride themselves on their roots and glorious past. The country itself has a diversified landscape including deserts, dense forests, rivers, and rugged mountains.
Beneath the surface, Iran is rich in natural resources such as oil, gas, minerals, metals, etc. However, due to decades of trade embargoes and sanctions, Iran has not been able to fully appreciate its natural wealth. Iran’s international policy, especially towards the United States and other powers, has put the country in a tight spot to conduct international business, including its neighbors.
Over the past couple of years, Iran has revisited its relationship with Saud Arabia. Along with down-grading its nuclear reactors to merely power-generation capacity, and disassociating the state from rebel organizations in Palestine, are some of the steps taken by the new regime to make way for foreign investments and trade have been part of Iran’s shift in the international policy.
Types of business structures in Iran
For foreign and local investors and entrepreneurs, there are several business formats to choose from in Iran. Depending on the nature, size, and capital, investors can form any type of company that suits their needs.
Here are some basic business formats in Iran:
| S# | Type of Company | Local Name | Min.paid-up capital required |
| 1. | Sole Proprietorship | Shakhs-e Haqiqi | Not applicable |
| 2. | Partnerships | Sharakat | Not applicable |
| 3. | Limited Liability Company (LLC) | Shirkat ba Mas’uliyyat-e Mahrud | $4,000 |
| 4. | Joint Stock Company (JSC) | Shirkat-e Sahami-e Am | $40,000 |
| 5. | Cooperative | Ta’avoni | $1,000-$10,000 (depending on the nature of engagement) |
Sole Proprietorship
As the name suggests, a sole proprietary business is owned and operated by a single natural person. The owner has unlimited liability for losses and debts in a personal capacity. This format is preferred by skilled professionals, lawyers, retailers, and start-ups.
Partnerships
A partnership business requires two or more natural persons to collaborate for a common commercial interest. A partnership may be general; where all partners are equally responsible for liabilities. Or it can be a limited partnership where the partners designated as ‘limited partners’ are liable only to the extent of their share in the business.
Limited Liability Company
An LLC is a formal business format that requires an Article of Association, minimum paid-up capital, and a series of rules to follow. An LLC is beneficial for small and medium businesses as it frees the owners of any personal responsibility towards liabilities and losses.
Joint Stock Company
A JSC is the most complex business format preferred by large-scale businesses that require heavy capital investments. A JSC is permitted to amass capital by offering public shares in the company through a stock exchange.
A JSC is required to have a board of directors, legal representatives, official bank(s), annual board meetings, and adherence to several other rules. Additionally, a JSC is also required to make its financial statements public.
Costs involved in registering a company in Iran
The costs incurred in the registration process of a company in Iran may vary depending on the size, nature, and location of the business.
Here are a few costs that must be budgeted for the registration process:
Sole Proprietorship
The cost of registering a Sole Proprietorship in Iran is relatively low and may range from $2 to $4.
Partnership
The cost of registering a Partnership in Iran is typically higher than a Sole Proprietorship and can go up to $20.
Limited Liability Company (LLC)
The cost of registering an LLC in Iran may range between around $40 to $80.
Joint Stock Company (JSC)
The cost of registering a JSC in Iran hovers between $200 to $400 depending on the nature and size of the company.
Cost of doing business in Iran
The costs incurred during the operations are subject to the business’s size, location, and many other factors.
In summary, below are a few expenditures company must take into account prior to commencement:
Legal and regulatory compliance: Businesses operating in Iran must comply with various legal and regulatory requirements, which may involve fees for obtaining licenses, permits, and other approvals.
Taxes
Iran has a relatively complex tax system, and businesses are subject to various taxes, including corporate income tax, value-added tax (VAT), and social security contributions.
Labor costs
Labor costs in Iran can vary depending on the industry and location. The minimum wage in Iran is currently around $700 per month.
Real estate
The cost of renting or buying commercial real estate in Iran can vary depending on the location and market conditions.
Utilities
The cost of utilities, such as electricity, water, and gas, can also vary depending on the location and usage.
Import/export duties
Businesses that import or export goods in Iran may be subject to import/export duties and other fees.
Transportation and logistics
The cost of transportation and logistics can vary depending on the mode of transport, distance, and other factors.
Advantages of registering a company in Iran
Iran is bordered by developed nations such as Turkey and Azerbaijan and under-developed countries such as Afghanistan and Pakistan. This unique neighborhood enables Iran to work as a bridge between these two economic extremes.
Here are some salient advantages of operating from Iran:
Access to a large and growing market
Iran has a population of over 80 million people and a growing middle class, providing opportunities for businesses to tap into a large and expanding market.
Strategic location
Iran is strategically located at the crossroads of Europe, Asia, and the Middle East, providing access to important markets and trade routes.
Abundant natural resources
Iran has abundant natural resources, including oil, gas, minerals, and agricultural land, providing opportunities for businesses in various sectors.
Skilled labor force
Iran has a well-educated and skilled labor force, particularly in sectors such as engineering, technology, and science.
Favorable business environment
The Iranian government has implemented various economic reforms to improve the business environment, including the reduction of bureaucratic barriers and the promotion of foreign investment.
Investment incentives
The Iranian government offers various investment incentives, including tax holidays, customs exemptions, and subsidies for certain industries.
Cost-effective operations
The cost of doing business in Iran can be relatively low compared to other countries, particularly in terms of labor costs and access to raw materials.
