Iran
Table of Contents
Iran PEO & Employer of Record
WeHG provides an International PEO and global Employer of Record service in Iran to companies willing to enter the Iran market or hire local/expat employees in this country.
Traditional approach requires establishing a subsidiary in Iran. However our solution allows you to start the operations in Iran within days hence save time and money. WeHG would recruit candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. .
Iran fast facts
Population, million: 83,992,949
Land area: 1,628,550 km²
Capital: Tehran
Local currency: Iranian rial (IRR)
GDP per capita:$ 6500.00
GDP in currency:$ 410.00 billion
The main sources of employment law are:
- Iranian labor law;
- The Constitutions and its amendments (1906, 1907, and 1979)
- Civil laws “Ghanon Madani”
- Council of Ministers and Ministry of Labor decrees and procedures (Aein Nameh)
- Judiciary verdicts and cases
- Collective bargaining contracts and agreement
- Common practices and occupational norms
- International Labour Organization (ILO)
- ILO Conventions
- ILO Recommendations
- Other international declarations and agreement
Hiring, Negotiating and Doing Business in Iran
Necessity of written employment contract
The contract must be in writing in accordance with the labor law.
Iran Employment Contract
Types of employment agreements
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Employment contracts |
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Fixed term |
Unlimited terms |
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Copies of written employment contracts must be kept by the employer and employee and submitted to the Ministry of Cooperatives, Labor and Social Security (Ministry of Labor) and the relevant Islamic Labor Council (or employee’s representative). |
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Iran working hours
44-hour week.
Overtime
40% above the hourly wage.
Vacation leave in Iran
Workers have 30 days of vacation per year as well as 3 days of vacation due to marriage or death of relatives.
Iran Maternity Leave
90 days. The position must be retained until the employee returns.
Iran Severance Laws
Iranian labor law is quite favorable for employees and makes it very difficult to exclude employees. Hiring personnel on alternate six-month contracts is considered illegal, as is the dismissal of employees without evidence of serious violations of the law. Labor discussions are allowed by a special labor council, which usually makes an opinion in favor of the employee.
In the event of dismissal, costs of work ability or dismissal, employees must be paid compensation for any accumulated vacation.
Iran Tax
Taxable income
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Iranian resident companies are taxed on their income derived worldwide. |
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Non-resident companies are taxed in Iran on their income derived from Iran. |
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If a foreign company registers a branch in Iran, such a branch will be taxed in Iran only on the profits derived from the work that has been done inside the country. |
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Corporate taxable income includes incomes derived by companies from the following sources: (1) a trade or business; (2) interest; (3) discounts; (4) capital gains; (5) dividends; (6) rents; (7) royalties; (8) management fees, etc. |
Tax rates
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The standard corporate income tax rate in Iran is 25%. Companies that are quoted on the Stock Exchange and Commodity Exchange are eligible to a reduced corporate income tax rate of 22,5%. |
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A withholding tax rate of 3% applies to payments made by companies:(1) to service providers;and (2) for rental payments. |
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The final transfer of real property is taxed at 5% and the transfer of goodwill is taxed at 2% on the transferred goodwill’s value. |
Personal income tax rates
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According to the new employment income tax law that came in force in March 2015, employees are exempted from taxation on employment income if their annual taxable income is less than 4.090 EUR. A 10% tax is levied on employment income amounting between 4.090 EUR and 28.600 EUR. The annual employment income exceeding 28.600 EUR is subject to 20% tax. |
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Business and professional income derived by individuals are taxed following a progressive tax scheme. The maximum tax rate of 35% is applied on annual business or professional income that exceeds 32.500 EUR. |
Health Insurance Benefits in Iran
There are private and public clinics that provide care.
Additional Benefits in Iran
There are about 28 social protection programs in Iran. For social security and unemployment insurance, the employee pays 7% of wages (aged 18 to 65), the employer (20 to 23%), the state (3%). Independent workers pay 12-18%.
Iran Holidays
- Martyrdom of Hazrat Fatemah
- Anniversary of the Islamic Revolution
- Birthday of Imam Ali
- Oil Nationalization Day
- Novruz Holiday
- Islamic Republic Day
- Sizdah Bedar
- Martyrdom of Imam Ali
- Eid al-Fitr
- Martyrdom of Imam Hasan
- Martyrdom of Imam Reza
- Martyrdom of Imam Hassan Asgari
- Prophet Muhammad’s Birthday
Why Choose WeHireGlobally
WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to effectively manage your overseas teams while minimizing cost and risk.
FAQ Iran
The workweek in Iran is based on a 44-hour week. Typically, employees work from Saturday to Wednesday (8 hours per day) and half a day on Thursday (4 hours).
- Martyrdom of Hazrat Fatemah
- Anniversary of the Islamic Revolution
- Birthday of Imam Ali
- Oil Nationalization Day
- Novruz Holiday
- Islamic Republic Day
- Sizdah Bedar
- Martyrdom of Imam Ali
- Eid al-Fitr
- Martyrdom of Imam Hasan
- Martyrdom of Imam Reza
- Martyrdom of Imam Hassan Asgari
- Prophet Muhammad’s Birthday
Tax rates
- The standard corporate income tax rate in Iran is 25%. Companies that are quoted on the Stock Exchange and Commodity Exchange are eligible to a reduced corporate income tax rate of 22,5%.
- A withholding tax rate of 3% applies to payments made by companies:(1) to service providers;and (2) for rental payments.
- The final transfer of real property is taxed at 5% and the transfer of goodwill is taxed at 2% on the transferred goodwill’s value.
Personal income tax rates
- According to the new employment income tax law that came in force in March 2015, employees are exempted from taxation on employment income if their annual taxable income is less than 4.090 EUR. A 10% tax is levied on employment income amounting between 4.090 EUR and 28.600 EUR. The annual employment income exceeding 28.600 EUR is subject to 20% tax.
- Business and professional income derived by individuals are taxed following a progressive tax scheme. The maximum tax rate of 35% is applied on annual business or professional income that exceeds 32.500 EUR.