According to Articles 3 and 4 of the Registration of companies Act, approved in 1931, any foreign company that wants to carry out commercial, industrial or financial activities in Iran through a branch office or a representative, must first has already been recognized in its country of origin as a legal entity and then it should be duly registered in Iran.

The council of ministers has also decreed that the purchase of machinery, equipment and services from foreign companies is permitted on the condition that they have their own registered representative office in Iran.

The branches and representative offices are registered at the office for Registration of companies, situated in the capital city of Tehran.

Requirements for registration of a foreign representative or branch office:

For registration of branch, representative and liaison offices, the following items are necessary:

1- a letter of certification issued by the relevant ministry, department, or state-
run organization indicating that an agreement has been concluded with the
foreign company, and that they work together.
2- completed from of declaration of registration.
3- a certified copy of the articles of association of the company.
4- a certified copy of the power of attorney of the company's chief
representative in Iran.
5- a letter of proxy given to an Iranian attorney at law, in the event that he is
delegated to carry out the registration procedures.

Copies of the originals should be duly legalized by the nearest Iranian consulate.

If in addition to the chief representative or branch managers, the foreign company has other representatives authorized to sign on behalf of the company, their name must also be registered. It shall not be obligatory to register names of junior employees of the foreign company such as accountants, attorneys and the like. Opening of new branches or appointment of a new representative should equally be registered.


Registration of Changes and Alterations:

Changes in the relative position of the foreign company representatives or branch managers must be registered and published in the official Gazette. If such changes are not duly recorded, all acts performed by the former representative or manager in the name of the company shall be considered as the responsibility of the company. Alterations in the foreign company's name, type, address, nationality, and capital must also be registered at the office for Registration of companies.

The submission of following documents are required for registration of the new chief representative position:

1- Completed form of declaration of registration in Farsi language.
2- Respective power of attorney.

Consequences of non-registration:

In accordance with Article 5 of the Registration Act, any person engaged in industrial, commercial or financial affairs in Iran, as a representative or a branch manager on behalf of foreign companies, and not applied for registration, shall be liable to the punishment of a fine. If this violation of law continues, then the government shall prevent the activities of the representative or branch manager.


"Branch Manager" and "Representative" under Iranian laws:

According to the stipulation of Iranian Commercial Code, branch managers and representative are commercial deputies, who have been assigned by the mother company to conduct business on behalf of the company. Their signatures are considered binding on the company. In accordance with Article 23 of the Regulation on Registration of the Companies, the term "representative" as mentioned in the Registration of Companies Act, is applicable to such individuals who have been granted sufficient authority by a foreign company and whose obligations are considered as the obligation of the company.


Legal effects of the registration of a branch or representative office:

Upon registration, the branch or representative office of the foreign company shall be subject to Iranian laws in areas such as labor, social security, taxation, etc. The government protects the legal rights of a registered branch or representative office in exactly the same manner as it does Iranian companies and establishments.


Rules of taxation for branch or representative offices of foreign companies:

In accordance with Article 105 the law of Direct taxation, foreign legal entitles must pay taxes on all taxable income earned through investment in Iran or from direct or indirect (agents, branches, etc.) activities.

Since taxable corporate income is assessed by inspecting the statutory account books, representatives and branches of foreign companies are obliged to maintain such books.

Submission of tax declaration and payment of taxes of the entities, whose central office is located outside Iran, must be carried out by their agents and representatives in Iran.

Tax exemption of branch or representative office:

Branches and representatives of foreign companies, which have been registered in Iran and by virtue of their articles of association are not authorized to engage profitable activities but can do marketing and collect economic information, are not liable to any taxation on the sums of received from the mother company in the form of revolving funds.

However, if it is proven that the said branches and representatives are engaged in profitable activities in Iran and are acquiring an income therefrom, the sums earned shall be subject to taxation.