Tenders in Iran? A Legal Guide for International Companies as Iran gradually reopens to global business, international companies are finding new opportunities to enter one of the Middle East’s largest and most dynamic markets. Participating in tenders in Iran—whether for infrastructure projects, procurement contracts, or service agreements—offers significant potential rewards.
However, the process involves navigating a complex legal and regulatory environment shaped by local laws, international sanctions, and strict compliance requirements mjklawfirm.
If you are a company executive, procurement officer, or legal counsel considering tenders in Iran, this guide explains everything you need to know—from business registration and compliance risks to tax and customs obligations, ensuring your entry into Iran’s market is both legal and strategic.
Understanding Tenders in Iran
Tenders in Iran? A Legal Guide for International Companies
What is a Tender Under Iranian Law?
In Iran, a tender refers to the competitive process through which government bodies or private companies solicit bids for goods, services, or construction projects. This process is primarily regulated by the Tender Law, enacted in 2005 to standardize procurement across public agencies.
- Tenders are categorized into several types:
- Public Tenders: Open invitations where all qualified companies may bid.
- Limited Tenders: Only companies selected by the contracting authority may submit bids.
- Single-Source Procurement: Used in exceptional cases where competition is not feasible.
- Single-Source Procurement: Used in exceptional cases where competition is not feasible.
Furthermore, tenders may be domestic (only Iranian companies) or international (open to foreign companies in very rare cases), depending on the project’s needs and funding sources.
Note: International tenders are common in industries like oil and gas, mining, healthcare, construction, and IT services.
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Key Legal Requirements for Foreign Participants
. Business Registration in Iran
Foreign companies cannot directly bid or sign contracts in Iranian tenders without establishing a recognized presence. Your options include:
- Registering a Branch or Representative Office
– Ideal for service-based businesses or suppliers - Forming a Joint Venture with a Local Company
– Recommended for construction, engineering, or large supply projects
Process Highlights: Submit corporate documentation, including articles of association, incorporation certificates, and board resolutions.
Appoint a local manager authorized to act on behalf of the company.
Obtain a commercial ID code and register for tax purposes
Authorities Involved
- Iranian Companies Registration Office
- Ministry of Economic Affairs and Finance
- Iranian Chamber of Commerce, Industries, Mines, and Agriculture (for certain industries)
Why It Matters- Failure to properly register can invalidate any contract you sign or expose your company to penalties under Iranian law.
Tax and Customs Considerations
Any foreign company participating in Iranian tenders must comply with local tax and customs requirements:
- Corporate Income Tax: Standard flat rate of 25% on taxable income.
- Value-Added Tax (VAT): 10% generally applied to goods and services.
- Customs Duties: Vary depending on the type of imported goods (check updated HS code lists).
Incentives Available:
The Foreign Investment Promotion and Protection Act (FIPPA) offers benefits like:
Tax exemptions for qualifying projects
Easier repatriation of profits
Access to international arbitration in disputes
Typical Mistake to Avoid: Some companies assume that foreign-source income is exempt from Iranian taxes; this is incorrect if the contract is executed in Iran or the income is sourced locally.
Practical Steps for Entering a Tender in Iran
Step 1: Monitor Official Tender Platforms
Key sources include:
- Iranian Tender Information Center (IETIC)
- Ministry websites (Oil, Energy, Transportation)
- Local newspapers for public sector announcements
Step 2: Identify the Right Entry Strategy
Assess whether direct registration, local partnership, or subcontracting is more strategic for your sector and project type.
Step 3: Complete Legal and Commercial Registrations
Prepare notarized and translated corporate documents in Persian. Ensure compliance with all local regulations.
Step 4: Conduct Compliance and Risk Checks
- Verify that no sanctioned individuals or entities are involved.
- Confirm financial institutions are not under secondary sanctions.
Step 5: Prepare Your Tender Offer
Typically includes:
- Technical proposal
- Financial offer
- Certificates of registration
- Bank guarantees (bid bonds)
- Evidence of past project performance
Pro Tip: Many Iranian tenders favor firms with strong local content plans, such as technology transfer or job creation strategies.
Common Pitfalls for Foreign Companies
Ignoring local content requirements: Some sectors require minimum Iranian employment or material sourcing percentages.
Underestimating translation issues: Persian language requirements are strict; mistranslations can disqualify your bid.
Failing to secure valid financial guarantees: Iranian public tenders often demand bank guarantees issued by approved Iranian banks.
Assuming post-bid negotiations are flexible: In public tenders, Iranian law prohibits material changes after the tender is awarded.
How Our Firm Assists International Clients
Participating in a tender in Iran requires more than just preparing documents; it demands local knowledge, legal expertise, and a proactive risk management approach.
Our international law team provides:
- Comprehensive tender compliance reviews
- Business registration and licensing services
- Strategic advice on sanctions mitigation
- Contract drafting, negotiation, and localization
- Representation before Iranian courts and arbitral bodies if disputes arise
Frequently Asked Questions (FAQ)
1. Can a foreign company participate directly without a local partner?
Yes, but only if you register a branch or representative office and meet tender requirements. Some sectors, however, encourage partnerships for better local integration.
2. What are typical timelines for tender participation?
Expect approximately:
- 6–8 weeks for company registration
- 2–4 weeks for preparing and submitting bids
- 4–12 weeks for evaluation and award decisions
3. Is arbitration available for tender disputes?
Yes. Many contracts permit arbitration under Iranian law or international rules (such as ICC Rules), especially if a FIPPA license is obtained.
4. Do we need to pay taxes even if we do not win the tender?
No, taxes generally apply only if you are awarded a contract and generate income in Iran.5. Can payment be made in foreign currency?
Public sector projects usually require payment in Iranian Rial. However, certain private-sector contracts allow for USD, EUR, or other foreign currencies, subject to Central Bank regulations
Contact a Lawyer in Iran Today
Navigating tenders in Iran requires a thorough understanding of legal obligations, compliance risks, and market practices. Without experienced local legal support, companies may face costly mistakes or missed opportunities.
Contact a Lawyer in Iran today to schedule a consultation with our international law team. We are here to help your business enter and succeed in the