December 5, 2007
Azar 14, 1386
LAWS AND REGULATIONS
- The Law on Change of Official Clock of the IRI ..... Page 1
- Maternity Leave Extended to Six (6) Months ..... Page 1
- Ban on Import of Counterfeit Products and Goods That
May Mislead Consumers ..... Page 3
- On Tax and Duties Payable on Expatriates' Salaries ..... Page 4
- Deemed Salaries of Expatriates Working for Armed Forces ..... Page 6
- Experimental Enforcement of Islamic Law of Punishments
Extended Until August 8, 2008 ..... Page 7
- Exemption from Payment of SSO Penalties Seems
to Be in the Pipelines ..... Page 8
- New Activities Becoming Subject to Withholding Taxes ..... Page 9
BUSINESS AND ECONOMY
- Evaluation of Government's Economic Management ..... Page 10
LAWS AND REGULATIONS
THE LAW ON CHANGE OF OFFICIAL CLOCK OF THE IRI
Official Gazette No.18242, Published on October 16, 2007
Letter no.662/92956 dated Sept.16, 2007
To His Excellency, Dr. Mahmood Ahmadinejad, the President of Islamic
Republic of Iran
Attached hereto, please find the Law on change of official clock of Islamic
Republic of Iran that was presented to the Islamic Consultative Assembly in
the form of a single asterisk urgency draft bill and was approved by ICA on
August 22, 2007 and subsequently confirmed by the Guardians Council.
Sole Article- The official clock of the country shall be brought, one hour,
advance at 24.00 on the first day of Farvardin (March 21) each year and shall
be returned to its original position again at 24.00 on 30th Shahrivar
The above Law comprising a Sole Article was approved by ICA in the open
session of Wednesday, August 22, 2007 and confirmed by the Guardians
Council of the Constitution on September 12, 2007.
ICA Speaker- Gholam'Ali Haddad Aadel
* * *
MATERNITY LEAVE EXTENDED TO SIX (6) MONTHS
According to Article 3 of the Law on Promotion of Infants' Breast Feeding
and Protection of Mothers During Maternity, approved 1378, mothers who
feed their infants by their own milk, instead of the overall 90 days of
maternity leave provided in Article 76 of the Labour Law, shall be granted a
maternity leave of four (4) months. The said period has now been increased
to six (6) months. Also, the period of entitlement to one hour of leave per day
during the first 20 months of the life of their babies provided in Note 1 of the
said Article 3 has now been increased to 24 months. The following is a
translation of the said law:
Official Gazette No.18186 published on August 6, 2007 (Mordad 15, 1386)
Sole Article- In Article 3 of the Law on Promotion of Breast Feeding and
Protection of Mothers During Maternity, approved 1374, the phrase "four (4)
months" shall increase to "six (6) months" and the words "up to a maximum
of 20 months" shall increase to "a maximum of up to 24 months" in Note 1 of
the said Article.
The above Law was approved by the Islamic Consultative Assembly on June
27, 2007 and confirmed by the Guardians Council on July 4, 2007.
ICA Speaker- Gholam'Ali Haddad Aadel
The following is a translation of the revised text of Article 3 of the above
Law, and two of its notes:
Article 3- Maternity leave, for up to three children, in the case of mothers
who feed their infants with their own milk, in government and nongovernment
sectors, shall be six (6) months.
Note 1- Mothers who feed their infants with their own milk, after returning to
work and completion of the six-month maternity leave period, shall be
entitled to one hour leave per day (without being deducted from their annual
leave) for up to a maximum of twenty-four (24) months, provided that they
continue to milk their infants, by breast feeding.
Note 2- Job security of mothers, after the period of maternity leave and
during the period of breast feeing must be secured.
* * *
BAN ON IMPORT OF COUNTERFEIT PRODUCTS AND GOODS
THAT MAY MISLEAD CONSUMERS
The Customs Organization issued a Circular No.73/385/525/316712 on
Feb.13, 2007 on the above subject. Some of the main phrases of the above
Circular have been reproduced below:
"As you are aware, some internationally recognized manufacturers, during
the recent years, granted license to producers in China, Taiwan and Vietnam,
etc. to produce under their trademarks. Also, some importers of commodities
have been importing goods with above trademarks with certain misleading
expressions on them such as "Model China", "Designed in China", or "Mod
Considering that according to Sub-clause 12 of Article 40 of the Customs
Law "import of the commodities on whose wrappers or on whose main
bodies the trademarks of other manufacturer have been indicated that may
cause deceit and shall mislead buyers and consumers, as regards the country
of manufacture, the manufacturer itself, or the main features of the product,
shall be prohibited", therefore, the customs officers shall refrain from
allowing clearance of any such imported goods from the customs under any
pretext, especially if the goods shall bear internationally recognized and
famous trademarks without the country of manufacture being explicitly
mentioned on them.
Customs officers, in cases where the goods shall bear the trademarks of
famous brands but have been produced in countries other than the actual
country of the original manufacturers, shall be under the obligation to require
the relevant license to manufacture in that country that must be endorsed and
confirmed by the embassy of Islamic Republic of Iran in those countries of
manufacture and must also require that the country of manufacture shall be
legibly indicated on the product. Considering that 2007 has been termed by
the World Organization of Customs as the year of combat against counterfeit
products and crimes relating to intellectual property, therefore, customs
officers are required to refrain form allowing customs clearance of the goods,
as provided in Sub-clause 12 of Article 40 of the Customs Affairs Law, in
case of any doubt in respect of the country of manufacture."
Subsequently, a further Circular was released by the Ministry of Economy
and Finance, as the controlling Ministry of the Customs Organization
regarding the above Circular of Mr. Mohammad Reza Naderi, the Customs
Affairs Deputy of the Customs Organization, expressing doubt on the
deceitful nature of the above imported commodities. Some main parts of the
above circular have been reproduced below:
"It is evident that the products imported into Iran on whose main body or
wrapper the trademark, name, or descriptions of a manufacturer, other than
the original manufacturer have been indicated, must be precluded from
clearance through the customs. However, only in case such particulars have
been written in such way as to cause the deceit of buyers and consumers, the
products must be stopped from entering Iran and customs clearance.
Naturally, anyone who may claim that the particulars given for a product
shall not deceive consumers may refer to the First Instance as well as the
Appellate Boards of Investigation of Customs Claims as provided in Article
305 of Customs Law and By-Laws. Opinions given by the appellate board
shall be final and binding. Therefore, the customs chief or his deputy can not
finally preclude import of certain commodities by issuing circular letters.
Further, it has been the regular procedure at the Customs, to erase counterfeit
trademarks from the faces of products in cases where final verdicts have been
issued by the above panel and/or the country of manufacture have been
legibly indicated on the faces of the products with due regard to the right
granted to those who may object, according to Articles 51 and 52 of the
* * *
ON TAX AND DUTIES PAYABLE ON EXPATRIATES' SALARIES
Official Gazette No.18116 Published on May 12, 2007
Council of Ministers' Decree No.H36023T/22231 Dated May 7, 2007
The Council of Ministers, in the course of a session held on May 2, 2007
amended Clause 1 of Decree No.H20790T/44327 dated December 25, 2000
concerning the mode of calculation of taxes and duties payable on the salaries
The following is the full amended text of the said Decree
"2. In cases where the salaries and benefits of expatiates have not been fixed
separately in the relevant contracts, the basis of calculation, except in the
following cases, shall be a table that will be drawn by the Ministry of
Economy and Finance, and the Ministry of Foreign Affairs. The said Table
shall be used by the relevant government organizations in their calculations.
Note 1- In the case of those foreign nationals who have been living in Iran
for a long period and (or) live in Iran as a result of their marriage to Iranian
spouse and are, therefore, subject to the provisions of Article 122 of the
Labour Law, approved 19901, and have been employed by private companies
and firms, calculation shall be made on the basis of accepted statutory legal
books and vouchers.
In the case of other foreign nationals engaged in work in public and
government organizations and entities, the salaries declared by employer
organizations and entities shall be the basis of calculation. Otherwise,
calculations shall be made, with due regard to the existing records, at the
level of the pertinent job and by making comparison with the level of salaries
of Iranian nationals. In any case, the amount of the salary to be determined
shall not be less than that declared as minimum wage by the Ministry of
Labour and Social Affairs.
Note 2- If a foreign national shall file tax return with the tax authorities in
his/her own country and shall have a copy thereof legalized and certified by
the Iranian embassy in that country, the figures in the said returns shall be
used as the basis of calculation of tax and duties by the Ministry of Labour
and Social Affairs as well as the pertinent tax department.
1 Article 122- The Ministry of Labour and Social Affairs may issue, extend any renew the work permits of
the following individuals:
a. A foreign national with at least ten years of continuous residence in Iran.
b. A foreign national having Iranian spouse.
c. Immigrants from foreign countries in particular Islamic states and those seeking political asylum
subject to holding valid immigration or refugee cards, and after the written approval of the Ministries
of Interior and Foreign Affairs.
Note 3- The basis of calculation of duties and salary tax of the foreign
nationals who have been employed at the government sector by virtue of
Article 82 of the Constitution of Islamic Republic of Iran1 and in compliance
with Article 127 of the Labour Law2, approved 1990, shall be the salaries and
benefits paid by the government entity concerned.
Note 4- The provisions of the treaties, approved by the Islamic consultative
Assembly, to avoid double taxation, shall only apply to the nationals of those
countries that have concluded the said treaties with the Islamic Republic of
Note 5- Missionaries of the religious minorities who receive work permits
with the confirmation of the Ministry of Culture and Islamic Guidance shall
not be subject to payment of work permit duties if they receive a certificate of
tax exemption (due to non-existence of income) from the relevant tax
department of the Taxation Affairs Organization.
Parviz Davoodi- First Vice President
* * *
DEEMED SALARIES OF EXPATRIATES WORKING FOR ARMED
Official Gazette No.18200 Published on August 23, 2007
Decree No.H35842T/84681 dated August 19, 2007
The Council of Ministers, in the course of a session held on August 8, 2007,
pursuant to a proposal made by the Ministry of Defence and Logistics of the
Armed Forces and by invoking the provisions of Article 6 of the Law of
1 Article 82- The employment of foreign experts by the Government is prohibited unless it is essential and
approved by the National Assembly.
2 Article 127- Employment of foreign specialists and technical experts required by the Government shall
take place, in consideration of the nationality, period of service and the amount of their wages, and with due
regard to the domestic specialized work force, after examination by and comments of the Ministry of Labour
and Social Affairs, and the Organization for Administrative and Employment (OAE) and with the approval
of the ICA. Work permits for employment of foreign experts, in such cases, shall be issued by the Ministry
of Labour and Social Affairs after approval by the ICA.
Government Punishments, approved 1374 ratified that the following text
shall be added, as Note 6, to Sub-clause 2 of Decree No.H36023T/22231
dated May 7, 2007:
"Note 6- The basis for calculation of duties, unemployment insurance
premium and salary tax payable by foreign aids engaged or to be engaged in
work at the Armed Forces, the Ministry of Defence and Logistics of the
Armed Forces, as well as the organizations affiliated to them shall be
determined through agreement by the Ministry of Labour and Social Affairs,
Ministry of Economy and Finance and the Ministry of Defence and Logistics
of the Armed Forces and on the basis of the number of expatriates and salary
levels declared by the Ministry of Defence and Logistics of the Armed
Parviz Davoodi- First Vice President
* * *
EXPERIMENTAL ENFORCEMENT OF ISLAMIC LAW OF
PUNISHMENTS EXTENDED UNTIL AUGUST 8, 2008
Official Gazette No.18204 Published on August 15, 2007
To Dr. Mahmoud Ahmadinejad, the Honourable President of Islamic
Republic of Iran
Please find attached hereto the Law on Extension of the Period of
Experimental Execution and Enforcement of Islamic Penal Code, approved
1370, the draft of which had been presented to the Islamic Consultative
Assembly, in the form of a double asterisk bill pursuant to your letter
No.310/76453 dated August 6, 2007, in compliance with Article 123 of the
Constitution of Islamic Republic of Iran.
The above Law was approved by ICA on August 8, 2007 and has been
confirmed by the honourable Guardians Council.
Gholam'Ali Haddad Aadel- Speaker, Islamic Consultative Assembly
Sole Article- The experimental period of execution and enforcement of
Islamic Penal Code, approved 1370, and its subsequent amendments, is
hereby extended for a further one year period. This Law comes into force as
of the date of approval.
Note. The Judiciary shall be under the obligation to present the draft bill of
the Islamic Penal Code, to the Islamic consultative Assembly, through the
Government, within a maximum period of three months.
The above Law, comprising a Sole Article and one Note was approved, at the
open session, by the ICA, on August 8, 2007 and was confirmed by the
Guardians Council on the same date.
Gholam'Ali Haddad Aadel- Speaker ICA
EXEMPTION FROM PAYMENT OF SSO PENALTIES SEEMS TO
BE IN THE PIPELINE
According to Article 101 of the Social Security Act, the Social Security
Organization shall charge employers one twelfth of the amount of social
security insurance premium that, according to the opinion of SSO Boards of
Settlement of Disputes, has not been paid on time by employers.
Considering that SSO insurance premium payable by contractors is a
percentage of the works carried out under a contract (16.68% of contracts
without materials and 7.78% of contracts where a contractor will be in charge
of procurement of materials and equipment) and also considering that some
contractors do not apply for SSO clearance certificate after payment of each
progress statement but apply for clearance certificate only after completion of
the project, therefore, the said penalty is not always directly related to a
failure, on the part of employers, to pay the insurance premium on the
salaries of their workers, on time.
The above penalties as well as those charged by the SSO for delayed
payment, according to information revealed by the Minister of Welfare and
Social Security, Mr. Abdul' Reza Mesri is being now exempted according to
a new law that will be soon approved by the Islamic Consultative Assembly.
The Majlis Deputies have just completed the first round of debates regarding
the draft law.
According to Mr. Mesri, the Principal debt of employers to the SSO will
become payable by installments during 12 to 36 months. Penalties will be
subject to exemption and reduction from 60% to 85% depending on the
duration of installment payment chosen by an employer.
* * *
NEW ACTIVITIES BECOMING SUBJECT TO WITHHOLDING
According to Article 104 of the Direct Taxation Act, amended on January 16,
2002, "the ministries, government entities and individuals who are required
to maintain statutory accounts books and file tax returns, are under the
obligation to deduct 5% of all amounts they pay as fees, hospitals, laboratory
or X-ray expenses, arbitration fee, consultation, expert advice, administrative
and fiscal services, auditing, writing, editing, composing musical
compositions and/or performances, theatrical performances, singing,
painting, brokerage fee or commission, any type of fees, commissions or
charges for the services excluding charges paid to the banks, cooperatives
funds and the authorized non-bank credit institutes, cleaning of buildings,
rental of offices and calculating machines, computer services, digital
telecommunication, rental paid for any kind of ground, air and marine motor
vehicles and means of transportation, machinery, plants, cold stores,
warehouse charges, repair and maintenance of lifts, central heating and air
conditioning equipment, any kind of construction works, technical
installations, various establishments, designing and planning of buildings and
installations, topography and cartography services, supervision and technical
calculations of various kinds, transportation, as well as any fees paid on
account of royalties for movie films. The 5% withholding taxes shall be paid,
within 30 days, to the account designated by the Taxation Affairs
Organization and the receipt for payment of the above tax must be submitted
to the original taxpayer.
According to Note 5 of the above Article 104 of the Direct Taxation Act, the
Taxation Affairs Organization shall declare the new activates subject of
deduction of 5% withholding taxes. The last of such declarations, is circular
No.211-3808/65200 of the Taxation Affairs Organization dated 18.02.2007.
According to the said Circular, the following activities are subject to
withholding taxes under Article 104 of the Direct Taxation Act:
1. Repair and maintenance of all types of land, air, sea and rail transport
vehicles, as well as office equipment and machines that shall be carried
out under a contract.
2. Lodging and accommodation provided to government and private sector
entities' personnel in hotels and other places together with pertinent
services to be carried out under a contract.
3. Training and educational services of all kinds.
4. Exhibits and fairs services.
5. Insurance services (whether medical or hygiene services).
6. All types of managerial services.
7. Landscapes maintenance.
8. Packaging of any product, in any manner, with any material.
9. Fee paid for logistics services and operation of cargo and passenger
terminals and facilities for rail, airport, aviation, ports and road
transportation and services.
10. Fee for refining and conversion of sugar lump and sugar.
11. Fee for the use of telecommunication equipment and facilities.
BUSINESS AND ECONOMY
EVALUATION OF GOVERNMENT'S ECONOMIC MANAGEMENT
The Government of Dr. Ahmadinejad can surely boast of being one of the
most active and hard working governments, in charge, after the victory of
1979 Islamic Revolution in Iran. Visits to every corner of all provinces
demonstrate the government's determination to solve people's difficulties
and hardships, throughout the country, in a move towards development and
progress of Islamic Iran. The said efforts, at the same time, seem to be of a
more intention to do good, rather than implementation of wise programs.
Thoughtless executive works will not surely bring favourable results.
It should be admitted, however, that visits by the government, to 336 cities in
30 provinces during the past two years resulted in the ratification of 6,119
decrees on development and removing various bottlenecks.
These visits provided a general consensus that funds should be directed
towards setting up infra-structures in deprived regions. As a result of this
trend, the bulk of credits by banks have been allocated to deprived regions.
Special attention was given, during the said trips, to the construction of large
refinery, petrochemical and manufacturing projects and establishment of
Government plans in devising fuel rationing cards and implementation of the
rationing plan are among the very brave steps taken by the 9th government,
after the Islamic Revolution, towards providing an objective system of
subsidies, supplementing social security system, enhancement of public
transportation network and boosting the output of refineries and power
The 9th government can also be pound in having reduced the interest rate
charged on banking facilities with the aim of expanding investment coupled
with the distribution of over 5,000,000 stocks known as stocks of Justice.
During the 16 years prior to the term of the 9th government, a total of 35,000
billion rials of stocks of government owned companies had been privatized.
This figure can be compared with 26,500 billion rials of justice shares that
went public only during the first years of office of the 9th government.
In spite of the above, there are some signs that the end result of the above
policies may not be very favourable. The following are only some of the said
- During the past years, the grip and control of all markets by the
government increased, so much so that the economy has lost its
efficiency to great extent and is no longer quite dynamic. The
government greatly intervened in the job market by unprecedented
increase of minimum wages, and had an adverse effect on the
commodity market through enforcement of a fixed prices system in a
move to stop prices hike. Government's change of interest rates charged
by banks and directing the trend of allocation of banks' credits towards
specific economic activities was also regarded as unfavourable
manipulation of fiscal and financing market that caused the
implementation of the policies introduced by the Honourable Leader in
respect of Article 44 of the Constitution, difficult.
Although the above restricting acts also existed during the reign of the
previous governments, the decrees and programs of executive
organizations and certain laws and regulations (such as the Annual
Budget Bill and its addenda) during the period of office of the 9th
government are explicitly in contradiction with the IRI's 20 Year
Outlook and the policies of Article 44 of the Constitution1.
- Government's disregard and neglect of free market system and fixing
the prices continues to be a main obstacle in the path of expansion of the
It is obvious that the government may insist that pricing must be
transparent in order to protect the legitimate rights of consumers. But,
actions such as rationing the fuel are obviously curtailing market
mechanisms, even if such acts can bring good results in the short term.
Rationing can not bring about discipline in consumption but pricing
(free market pricing) can efficiently and speedily prevent wastage and
- Price control, at a time when the liquidity has a growth of 40% per year,
has provided tremendous difficulties for manufacturers that will surely
have adverse effects on production, investment and employment levels.
Inflation has its roots in economic and social structures. Fixing prices
and reducing interest rates of banks' credit facilities surely can not
eliminate or even reduce the effects of erroneous monetary policies,
budget deficit, unprecedented growth of cash in hard, state run
1 Please see LIS Bulletin of August 30, 2006.
economy, the heavy burden of government and public companies, lack
of discipline, extravagance, disregard of the Law, etc.
To make good the losses the government is being urged to:
- Bring about discipline and transparency in drawing up annual budgets
and activities beyond the budget.
- Total avoidance of budgetary deficit.
- Promoting management of affairs by the knowledgeable elites in all
- Expanding justice and respect of private ownership by natural persons
and legal entities.
- Unconditional release of grips by the government over the economy.
- Protection of small industries and businesses.
- Enhancing competitiveness of Iranian economic enterprises at the
international markets through promotion of free market mechanisms.
- Expeditious revision of labour law, bankruptcy law and other laws
affecting the economic trends.
- Organization of capital market and avoiding concentrated planning.
- Globalization of national economy for the purpose of protection of
Iran Economics – September 2007
* * *