Easing of sanctions in Iran by the world’s powers will boost investment opportunities in Iran – according to KPMG.
Dubai, November 2015: KPMG and international law firm Freshfields Bruckhaus Deringer recently held a conference in the UAE titled ‘Investment Opportunities in Iran’ to share insights on what to be aware of when approaching the Iranian market to do business.
The conference was attended by senior stakeholders and investors from across the UAE.
With a population of 78 million, Iran is the 18th largest economy in the world after Turkey and before Australia. Currently, almost 64% of the population is under the age of 35 years – making it a lucrative market for UAE investors.
Iran has also an established industrial base and is the largest exporter of cement in the world alongside commodity and energy reserves. It has the largest natural gas reserves and the 4th largest oil reserves in the world.
Iran has highly-developed infrastructure with 54 airports and over 10,000 kilometers of railway. It is a diversified and resilient economy, and despite years of war and sanctions it has continued to grow consistently, with the oil sector accounting for only 10% of GDP.
Sharukh Dumasia, Partner at KPMG says, “Iran is the last unexplored frontier for international investors. Its favorable demographics, significant private sector, resilient diversified economy, established infrastructure and encouraging tax environment present rich opportunities.
Investors have recognized this and have already begun preparing themselves for potential investment; ready to close deals as soon as sanctions are relaxed. We believe that the key to success will be: finding the correct local partner, thorough due diligence to understand the opportunities and careful structuring to ensure legal protection alongside commercial efficiency.
We want to offer potential investors an overview of the economic and business landscape of the country and share perspectives on current and future investment opportunities, including the factors to be aware of when approaching the Iranian market.”
Nilesh Ashar, Partner and Head of Tax at KPMG says: “Iran has no tax on dividends and no capital gains tax. Coupled with low corporate tax rates, free zones and a number of established double taxation treaties, Iran is a very attractive option for investors. ”
Easing of sanctions could lead to liberalization of trade and direct foreign investment - particularly into oil, gas, and petrochemicals. It could also lead to a rise in size and importance of capital markets and result in Iran being added to the MSCI Frontier or Emerging markets index.
Farid Sigari-Majd, Partner at Freshfields said: “As talks of easing sanctions gain momentum, investors are eager to understand potential business opportunities in Iran. Investors can seek to gain legal protection under established foreign investment laws within Iran and internationally through a number of bilateral agreements with more than 40 countries across the world.”
In addition, it was pointed out that potential investors need to be aware of factors such as: pre planning deal-related considerations (applicable sanction regime, restrictions on foreign investments, local partnerships), deal execution (local advisors, due diligence, commercial codes, financing) and post deal considerations (human capital, labor laws, capital controls).
It was noted by all speakers that Iran offers vast market potential for investors, the business environment is buoyant and the potential rewards for those prepared to embrace this market are immense.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
About Freshfields Bruckhaus Deringer
Freshfields Bruckhaus Deringer LLP is a global law firm with a long-standing track record of successfully supporting the world's leading national and multinational corporations, financial institutions and governments on ground-breaking and business-critical mandates. Our 2,500 plus lawyers deliver results worldwide through our own offices and alongside leading local firms. Our commitment, local and multi-national expertise and business know-how means our clients rely on us when it matters most.
For media queries:
Assistant Manager, Markets
T: +971 4 424 8906
M: +971 52 991 0159
© 2018 KPMG, KPMG LLP and KPMG Lower Gulf Limited, registered in the UAE and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The views and opinions expressed herein are the personal opinions of the interviewees and authors based on their personal experience working as Auditors in the industry and do not necessarily represent the views or opinions of KPMG International or any KPMG member firm.