Iran’s New Step toward Supporting Knowledge-based Companies

Iran Parliament passed the “Law on Knowledge-based Production Surge”

The Law on Knowledge-based Production Surge was approved by Iran Parliament on 1st May 2022. The Law was passed with the objective to facilitate knowledge-based activities, assist innovative companies and to prepare the ground for investment in elite human resources. The Law consists of 20 Articles, that according to MPs, have been approved to eliminate obstacles in obtaining business licenses and permits by knowledge-based enterprises.

According to Iranian laws and regulations, knowledge-based companies are private or cooperative institutions that are established in order to boost knowledge-based economic development and to promote invention and innovation and ultimately commercialize their findings (including design and production of goods and services) in technological fields, particularly in production of related software.

Details of the characteristics of such companies are reflected in the “Regulations for Identifying knowledge-based companies and institutions”.

The Law on Knowledge-based Production Surge has defined three categories of incentives for knowledge-based companies:

  • Facilitation of financial support to knowledge-based companies and institutions as well as supporting research and innovation funds
  • Facilitating issuance of licenses and permits for knowledge-based companies; and
  • Enabling use of their capacities in various sectors including capital market, banks, financial institutions, etc in order to direct cash flows towards innovative industries

The Law also provides for a specific dispute resolution procedure for knowledge-based companies in specialized branches of the judiciary.

There are many other changes in the afore-mentioned law compared to previous regulations governing this sector. Article 11 of the Law not only sets certain tax exemptions for knowledge-based companies in the form of credit, it also allows for such credit to be transferred to later fiscal years of such companies. The exemption will be equal to the cost of R&D incurred by knowledge-based companies and institutions.

In previous years, knowledge-based companies were obliged to own their administrative office and this was hurdle to their operation, whereas in the new Law, this requirement has eased out.

According to the Law on Knowledge-based Production Surge, should such companies produce special goods or services inside the country, public and governmental organizations will be banded from importation of such products/services. This will be a significant step forward in utilization of local products and services.

Iran’s plan to support emerging knowledge-based companies and institutions kicked of about 10 years ago. The Law on Supporting Knowledge-based Companies and Institutions and Commercialization of Innovations was passed in 2010. Dr. Sourena Sattari, Vice-President for Science and Technology has stated that “the Law on Knowledge-based Production Surge addresses all the issues we have been dealing with over the past 10 years and it targets elimination of those obstacles.”