Iran

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:

  1. Iranian labor law;
  2. The Constitutions and its amendments (1906, 1907, and 1979)
  3. Civil laws “Ghanon Madani”
  4. Council of Ministers and Ministry of Labor decrees and procedures (Aein Nameh)
  5. Judiciary verdicts and cases
  6. Collective bargaining contracts and agreement
  7. Common practices and occupational norms
  8. International Labour Organization (ILO)
  9. ILO Conventions
  10. ILO Recommendations
  11. Other international declarations and agreement

Hiring, Negotiating and Doing Business in Iran

Necessity of written employment contract

The Labor Law provides a very broad and inclusive definition of the individuals it covers, and written, oral, temporary and indefinite employment contracts are all recognized.

To have a valid contract concluded under the Law, the following provisions must be included:

  1. Type of Work, vocation or duty that must be undertaken by the worker;
  2. Basic compensation and supplements thereto;
  3. Working hours, holidays and leaves;
  4. Place of performance of duties;
  5. Probationary period, if any;
  6. Date of conclusion of contract;
  7. Duration of employment; and
  8. Any other terms and conditions required according to nature of employment.

Iran Employment Contract

Types of employment agreements

Employment contracts may be for fixed or unlimited terms. Copies of written employment contracts must be retained by the employer and the employee and given to the Ministry of Cooperatives, Labour and Social Welfare (the Ministry of Labour) and the relevant Islamic Labour Council (or the employee’s representative).

Iran working hours

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). Any hours worked beyond these will entitle the employee to overtime. 

Overtime

The Law mandates a payment of 40% above the hourly wage to employees for any accrued overtime. The employee must consent to overtime work

Vacation leave in Iran

Employees are entitled to leave on all official state holidays (approximately 22 days a year) and Fridays. Any employee working during these holidays will be entitled to overtime pay. Additionally, employees are entitled to one-month holiday per annum. The annual leave for those employees engaged in hard and hazardous employment shall be five weeks per annum. Employees are entitled to save up to 9 days of their annual leave

Employees are entitled to 3 days of paid vacation for marriage or death of a spouse, father, mother or child

Iran Maternity Leave

Women employees are entitled to 90 days of maternity leave. The employee’s salary during maternity leave will be paid according to the provisions of the Social Security Act. Maternity leave must be considered part of an employee’s service record. Employers must provide returning employees with the same position.

Iran Severance Laws

The Iranian Labor Law is very employee-friendly and makes it extremely difficult to lay off staff. Employing personnel on consecutive six-month contracts is illegal, as is dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee.

In case of termination, disability or redundancies, employees must be compensated for any accrued leave. 

Iran Tax

Taxable income

  1. Iranian resident companies are taxed on their income derived worldwide.
  2. Non-resident companies are taxed in Iran on their income derived from Iran.
  3. 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.
  4. 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

  1. 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%.
  2. A withholding tax rate of 3% applies to payments made by companies:(1) to service providers;and (2) for rental payments.
  3. 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

  1. 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.
  2. 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

The Iranian constitution entitles Iranians to basic health care, and most receive subsidized prescription drugs and vaccination programs. An extensive network of public clinics offers basic care at low cost, and general and specialty hospitals operated by the Ministry of Health provide higher levels of care. In most large cities, well-to-do persons use private clinics and hospitals that charge high fees. Specialized medical facilities are concentrated in urban areas, but rural communities have relatively good access to primary care physicians at clinics in villages, where the government-sponsored primary health care system has raised the level of health education and prenatal care since the late 1990s.

Additional Benefits in Iran

Iran has a comprehensive social protection system with some 28 social insurance, social assistance, and disaster relief programs benefiting large segments of the population. These programs include training and job-search assistance, health and unemployment insurance, disability, old-age and survivorship pensions, and in kind- or in-kind transfers including subsidies (e.g., housing, food, energy), rehabilitation and other social services (e.g. long-term care services for the elderly), and even marriage and burial assistance.

In addition to income tax, employers are required to contribute to the State Social Security Fund and the Employment Fund. For social security and unemployment insurance, the employee pays 7% of salary (between the ages of 18–65), employer (20 to 23%), the State (3%). Independent workers pay 12–18%, depending on the type of coverage sought.In 2003 the minimum standard pension was 50 percent of the worker’s earnings but not less than the amount of the minimum wage.

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

  • Working hours in 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).

  • What are the main holidays in Iran?

    • 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
  • What are payroll taxes in Iran?

    Tax rates

    1. 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%.
    2. A withholding tax rate of 3% applies to payments made by companies:(1) to service providers;and (2) for rental payments.
    3. 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

    1. 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.
    2. 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.
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