Iranian Legal Newsletter

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Contents:

Trial Execution of VAT Legislation Extended for Another Year
J.Nouraei & M.Mostafavi Law Offices -29 December 2020-Tehran-In line with Article 2 of the Civil Code of Iran, according to which the legislation of the Iranian Majlis is enacted after 15 days from the date of its publication in the Official Gazette, the Law of Extension of the Trial Execution of the Value-added Tax Act came into effect on 23 December 2020.

The Majlis in the said measure extended the trial execution period of the VAT Act, passed in spring 2008, up to 22 October 2021. The applicable amount of the Iranian VAT is currently 9% of transacted goods and services. Exclusions have been foreseen in the Act.

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Iran to Tackle FATF Problem for the Second Time
J.Nouraei & M.Mostafavi Law Offices -28 December 2020-Tehran- In light of the likely re-entry of the USA to the multi-party nuclear deal with Iran (JCPOA), committed to by US President-Elect Joe Biden, Iran is keen to wipe out hurdles of any kind and smooth global banking transactions to ease business deals with the eventual lifting of the present sanctions.

The sanctions were imposed on Iran by the outgoing President Donald Trump.  Accordingly, Iran is trying to be removed from the black list of the Financial Action Task Force (FATF), an intergovernmental anti-money laundering (AML) and counter-terrorist financing (CFT) body. To achieve this goal, bolstered with the agreement of the Grand Leader of the Islamic Republic of Iran, Ayatollah Ali Khamenei, the Expediency Council has been delegated the task of retackling the Iranian parliament legislation already ratified and in line with accepting the international standards of FATF.

The Expediency Council, as stipulated in the Iranian Constitution, is responsible for settling differences and disagreements arisen in relation to the Iranian parliament legislations. It was following the Expediency Council’s initial opposition to the aforesaid legislation, that FATF blacklisted Iran in February 2020.

According to Seyyed Mohamad Sadr, a member of the Expediency Council, “Considering the current conditions of the country and the effects of Iran being blacklisted, it can reasonably be foreseen that there would be fewer opposing voices in this round of debates in the Council’’

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Conversion of Companies allowed in Iran, not Yet Executable
J.Nouraei & M.Mostafavi Law Offices -8 December 2020- Tehran – After years of prohibiting the conversion of commercial companies into one another, Iran has decided to lift the ban. In our contact today with the Companies Registry we realized that the new regulations in this respect are being processed and will be executed in the near future. The conversion of private joint stock companies to public joint stock companies, foreseen in Articles 277 to 283 of the Amendment to the Commercial Code, remains possible as has previously been the case.

The seven companies referred to in Article 20 of the Commercial Code are: 1. Joint Stock Company (in two private and public forms) 2. Limited Liability Company 3. General Partnership 4. Limited Partnership 5. Joint Stock Partnership 6. Proportional Liability Partnership 7. Producers and Consumers Cooperatives.

A look at the background of the aforesaid development indicates that the Council of Ministers in its decree No. H57048T/88919 Dated 1398/07/15 (7 October 2019) added the following text as Article 36 to the Executive Procedure of the Companies Registration Law of the Iranian year 1311 (13 May 1932):

“Article 36- Conversion of all the companies listed under Article 20 of the Commercial Code of 1311 into one another is allowed. The manner of the conversion of these companies shall be based on the rules of implementation, to be prepared within three months by the Legal Deputy of the President assisted by cooperation with the Ministry of Economic Affairs and Finance and the National Organization for Registration of deeds and Properties”.

In a supportive development, the head of the Judiciary in circular letter No. 900/123032/1- Dated 99/7/30 (21 October 2020) has also declared that conversion of the commercial companies into one another is allowed and this stipulation should be added as Article 10 to the Procedural Regulations relating to Articles 196, 197 and 199 of the Commercial Code of Iran.

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