| I |
N |
V |
E |
S |
T |
I |
N |
G |
|
I |
N |
|
I |
R |
A |
N |
|
Customs and Taxation:
How Investor Friendly?
Time: October 1999. Place: Tehran, Iran. Occasion:
Iran’s First International Mines & Metals Investment Forum (IMIF’99). Otto
Zavesiczky, currently Anglo Exploration Iran branch manager, is representing Anglo
American plc at the international companies’ panel of the conference. Reading an
address from the company’s management to the international audience curious about
investing in Iran, he tells of the ups and downs in negotiations and getting a mining
project: “… a change of administration in Iran meant new authorities and new
negotiations. … However, the new authorities were more interested and the new rules
were far from investor-friendly….” Then he pauses and corrects, “Excuse me,
far ‘more’ investor-friendly.” And he repeats the positive expression for a
second time.
Almost a year and a half since that date,
Anglo Exploration Iran Branch in busy in Zarshuran and even looking beyond at other parts
of the country. At the same time, the company presents the following report on
mining-related business in Iran. It must be noted that this report was prepared before the
merger of the two ministries of Mines & Metals, and Industries:
| Customs problems and taxation on foreigners should be addressed
to keep Iran competitive, in terms of costs, with other countries |
With regard to compensation itself, the
foreign investor would expect more back than what he put into a project. There should be
compensation for loss of future profits and for the “opportunity cost” for
having spent time and money on a virtually halted project in one country rather than on an
eventually profitable one in another country.
After spending 5 years and close to 5 million dollars, Anglo is operating essentially on
trust.
Exploration Licenses: Anglo Exploration GmbH established a
branch in Iran to demonstrate its long-term commitment to Iran and to enable it to procure
exploration licenses which it had been led to believe was possible for registered
branches. But the Ministry of Mines & Metals wishes that joint ventures be formed with
its agencies.
We would suggest that foreigners, who are
registered in Iran and part of the local business community, should have the right to
obtain exploration licenses and only have to form formal joint ventures once a discovery
has been made or an acquisition sought.
Customs and Taxation: Bureaucratic problems with Customs have
been extremely costly in terms of both time and money for Anglo. Anglo has to involve
different parties every time it imports a drilling contractor rather than being able to do
it directly. Speaking of taxation, Anglo considers the taxation on foreigners to be
excessive as compared to the rates charged in other countries. Obviously, this would limit
the amount of experts that Anglo could send to Iran and therefore limit the number and
sizes of projects it could undertake. Thus limiting investment and employment of locals.
Currently, Anglo directly employs 4 Iranians for every foreigner it uses in Iran.
Ready to Be More Active: As a conclusion, Anglo is ready to
continue investing in Iran. In the year 2000 the company has spent about $1 million on
operations in Iran and our budget for Iran operations has increased for year 2001. This is
a strong indication of the company’s intention to be more active in Iran; to
concentrate on specific areas and to conduct more extensive operations.
However, customs problems and taxation on foreigners
should be addressed to keep Iran competitive, in term of costs, with other countries.
Meanwhile, Anglo appreciates the cooperation and assistance of its Iranian partner, GIMCO
(General Iranian Mining Company). Moreover, the collaboration of the Ministry of Mines
& Metals has also been important in tackling some of the problems. |
|
