May
27
DROIT IRANIEN LIS 531 du 2/8/06 ouverture de LC

Circulaire du Ministère du Commerce du 20 Mai 2OO6 sur les ouvertures de lettres de crédit pour les importations.

August 2, 2006

Mordad 11, 1385

LAWS AND REGULATIONS

- Regulations on Commodities Imports by Opening L/C ..... Page 1

- Change of Currencies under L/C's from US$

to Other Currencies ..... Page 5

BUSINESS AND ECONOMY

- 40,000 MW's of Power Generation by Private Sector

During 10 Years ..... Page 6

- A Halt in Energy Subsidies Will Close Down 50% of

the Industries ..... Page 7

- Hopes for Attracting Foreign Investors ..... Page 8

- Completion of Tehran-Caspian Highway Subject to

Procurement of Budget ..... Page 9

- Employers' Contributions to SSO Premiums Shall Reduce

by 7% ..... Page 10

- The Ex-Minister of Economy and Finance on

Achievements of the New Government ..... Page 11

- Iranian Internet Network Becomes Operative in

September 2006 ..... Page 12

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LAWS AND REGULATIONS

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REGULATIONS ON COMMODITIES IMPORTS BY OPENING L/C

The Ministry of Commerce, through its Circular No.85/2/2844 dated May 20, 2006 quoted an earlier instruction given by the Central Bank of Islamic Republic of Iran regarding the above subject as follows:

Commodity Imports by Means of Letters of Credit

Importers of goods must submit an application for opening L/C together with the Statement of Registration of Order to a bank in Iran. The Statement of Registration of Order must have the confirmation of the Bureau of Registration of Orders and Supervision of Commercial Exchanges of the Ministry of Commerce, and its validity period must not have expired.

The L/C opening bank shall take the following actions in accordance with the applicable regulations:

1. To check the application made by the applicant importer and to check the validity and contents of the explanatory notes imprinted by a rubber stamp on the said application by the Ministry of Commerce. The stamp known as the Order Registration Stamp shall specify whether the goods being the subject of the application may be imported by using foreign currencies purchased by the importer at the market, the foreign currencies earned through export of goods from Iran or without using any foreign currency allocated and sold by banks. Therefore, commodities may be imported by opening letters of credit through the use of foreign rates of exchange, or by using the foreign currencies belonging to the applicant importer or by using the credit offered by the L/C opening bank or through the use of Foreign Currency Stabilization Fund or by using foreign currencies supplied through other sources or through a combination of the above methods. In the above cases, it shall not be required to have the application stamped by the Ministry of Commerce if the method of procurement of foreign currency shall be different from what the said Ministry originally stamped on the application.

Note- In the case of applications made by the Government organizations mentioned in Article 160 of the 4th Development Plan Act, the requirement under Sub-clause "d" of Article 13 of the 4th Development Plan Act in respect of foreign transactions and contracts having a price of one million US dollars or more must be complied with and the certificate in respect of such compliance must be taken from the applicant and kept in the records.

2. Aggregation of Customs Duties, Taxes, Order Registration Fee and Other Charges

According to Article 2 of the Law Amending Certain Provisions of the Third Development Plan Act, as well as the requirements of the Law on Collection of Duties and Charges from Producers of Commodities, and Providers of Services and Importers, approved on January 22, 2003 all applicable duties, taxes, order registration fees and other charges payable by commodities importers have been aggregated and reduced to a sum of 4% of the customs value of the goods.

The above sum of 4% as well as the total amount of commercial profit tax fixed by the Council of Ministers in respect of every commodity are collectively known as Import Duties, that will be collected by the Customs.

3. Procurement of the Amount of L/C

Opening the L/C by collecting the equivalent rial value of the L/C by the bank and sale of foreign currency by the bank to the applicant importer or by using the foreign currencies belonging to importers or through a combination of these methods shall be governed by the following regulations:

3.1 A down payment shall be fixed by the L/C opening bank and collected on the date of opening the L/C by the bank with due regard to the creditability of the applicant importer. The balance due on the L/C shall be paid by the applicant importer on the date of negotiation of the documents.

3.2 The amount of the down payment for import of all commodities by ministries and government entities being funded through the General Budget Bill when importing goods through letters of credit shall be 100% of the value of the L/C on the date of opening the L/C.

Note- The companies and organizations affiliated to the Government mentioned in Article 4 of the Public Accounts Law and confirmed by the Management and Planning Organization or MPO comptroller of the organization or entity concerned , regardless of whether they shall have the right to receive funds out of the Budget Bill or not, in cases where they actually do not use the resources of the General Budget Bill in general or in respect of import of a certain commodity shall be exempt from the provisions of this present Sub-clause and may proceed to open L/C according to the provisions of Sub-clause 3.1 above.

3.3 Considering the manner of collection of down payment of the L/C value, banks shall be under the obligation to obtain sufficient security from the applicant importers at the time of opening L/C in respect of the remaining value of the L/C at their own discretion and risk in order to make sure that the remaining value of the L/C shall be paid by the applicant importer in due time.

3.4 The banks shall consider the sale of foreign currencies to applicant importers, on the dates of payment of down payment and interim payments as final sale of foreign currency and shall record such transactions in their books on the date of such transactions. The final settlement of account with the applicant importer on the date of endorsement shall be made by using the exchange rates on the date of negotiating the documents or on the date of maturity of payment (in case of time L/C's and refinance L/C's) in respect of the remaining value of the letter of credit.

Note 1- If the applicant importer shall accept and undertake all fluctuations in the rates of conversion of foreign currencies, the down payment and interim payments shall be made on account basis and final settlement of accounts with the importer concerned shall be made at the rate of exchange prevailing on the date of negotiating the documents.

3.5 The same provisions above shall apply if the foreign currency shall be procured out the currencies belonging to the applicant importer for the purpose of opening letter of credit.

4. It shall be permissible to import goods up to a value ceiling of US$100,000 through making transfer directly in favour of a beneficiary, after obtaining all the required permits and performing all order registration formalities at the Ministry of Commerce.

In such case, the importer must submit evidence on arrival of the import goods in a customs house in Iran within six months after transfer of the price.

In a Circular No.8/SA/705 dated May 4, 2006, the Central Bank provided the following explanations regarding transfer of money for the purpose of import of goods:

["Importers of commodities may pay the price of the goods in various methods including transfer of foreign currencies through the banking network. Payment of price by making transfer of money shall be made by instruction to be given by importer to the operating bank to send a sum of money in writing, by telegram, etc. through an agent bank to a beneficiary outside Iran.

The following points must be taken into consideration in respect of imports by making transfer of funds:

1. If transfer of fund shall be made by using the foreign currencies belonging to the customer (importer), he may clear the goods from the customs by showing the documents evidencing imports by using his own foreign currencies and the order registration documents to the customs.

2. If the importer has asked for transfer of funds by banks through the use of foreign currencies purchased from banks, the importer shall be under the obligation to submit documents evidencing entry of the goods into Iran, within 6 months after the date of transfer.

3. All exporters of goods may import commodities into Iran by using the foreign currencies they earn through export of goods from Iran.

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CHANGE OF CURRENCIES UNDER L/C'S FROM US$ TO OTHER CURRENCIES

The Central Bank of Islamic Republic of Iran, through Circular No. 60/1091 dated June 18, 2006 made the following recommendations to importers of commodities to Iran:

Importers of goods to Iran are urged to take the following points into consideration:

1. To use currencies other than US dollar for the purpose of opening letters of credit and to obtain the pertinent proforma invoice and order registration document also in a currency other than US dollar.

2. To change the type of foreign currencies under the letters of credits that have been opened already but the documents thereunder have not been yet negotiated, or in case the L/C has been partly used but still has a remaining balance.

3. It shall be permissible to change the type of the foreign currencies of the letters of credit at the exchange rate prevailing on the date of change of currency by amending the order registration documents at the Ministry of Commerce.

4. In cases where a letter of credit has been already opened and the supplier is agreeable to collect the money of the L/C in a currency other than US dollar, but the money under the L/C is not yet payable, the parties may agree that the money under the L/C shall be paid to the supplier by using the rate of exchange prevailing on the date of payment.

5. In cases where the down payment under the L/C has been paid by the customer in rial and converted into US dollar by the bank and kept by it in the form of a forex deposit, the settlement of the L/C shall be made on the basis of the rate of conversion of the new foreign currency designated to be the money of the L/C, and all calculations to be made by banks shall be on the basis of the new foreign currency.

6. In the case of those letters of credit pertaining to international tenders or the transactions and contracts made without tender formalities, the buyer shall be under the obligation to arrange for the change of the currency of the L/C from US dollar to a new currency.

7. After the date of release of this Circular (June 20, 2006) if any letters of credit shall be opened to be payable in US dollar, the following provisions must be inserted in the terms of the L/C:

"If any amount payable under this L/C is not possible to be paid in USD, it will be paid in another alternative convertible currency by converting the USD amount to the respective alternative currency at the respective exchange rate announced by the concerned Central Bank, two banking days prior to the payment date."

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