Rouhani Cabinet to Introduce More Incentives for Startups

EghtesadOnline: A pending bill which envisages tax relief and provision of insurance coverage at lower rates for startups along with cutting the red tape is awaiting the approval of President Hassan Rouhani's Cabinet.

News ID: ۷۸۳۵۸۹

07 August 2018

The bill has been viewed by many as a harbinger of change and a new measure by Rouhani and his officials to pave the way for fledgling firms toward further growth.

Officially titled the Innovation Bill, the government is yet to release details of the measure, but according to officials it can entail tax exemption for a window of three years for newly founded startups which generate less than five billion rials ($113,630) annually, ICTNA reported.

During a seminar titled Venture Capital: Challenges and Opportunities, attended by directors of VCs and startups, ICT Minister Mohammad Javad Azari-Jahromi said the bill is in its final stages, according to Financial Tribune.

Pointing to the upcoming sanctions to be imposed against Tehran by Washington, the minister said, "Digital evolution is the key to the salvation of Iran's beleaguered economy."

The minister believes that the looming sanctions can direct local investment toward startups since many other conventional businesses are forced to halt their operations.

He is of the opinion that as Iran's ties with many of its foreign partners will be cut off, startups which used to face competition from global competitors can take their time and build up their businesses without the pressure of rivalry with multinational companies.

>Venture Capital

While many who are stuck in old ways expect the government to provide startups with financial support, the ICT minister firmly believes venture capitalists must lead the way when it comes to monetary aid for fledgling firms.

Bringing to the fore the issues faced by startups in small towns, the minister said due to a lack of venture capitalists and investors in the underdeveloped areas, the ministry still needs to provide financial support to businesses active in those parts of the country. He added, "If VCs extend their reach, they can take it from here and support the businesses."

Azari-Jahromi also said the ministry has set a target of creating 100,000 employment opportunities in the sector calling on VCs to help the government realize the goal.

The minister further noted that all of Iran's cities are currently covered by the third and fourth generations of mobile network technology which can set the stage for the presence of VCs across the country.

>Growing Presence

During recent weeks, Azari-Jahromi has been pushing other Cabinet members toward the application of modern technologies and tapping potential of startups and knowledge-based firms. He has signed numerous agreements with other state bodies so as to promote the application of information and communication technologies and secure a bigger share of the economy for startups.

During the seminar, Azari-Jahromi touched on the recently signed agreements, saying the objective of the agreements is to create a market for Internet-based companies, which can ultimately lead to employment opportunities for thousands of people.

The ICT Ministry has recently signed agreements with the energy and agriculture ministries and will soon do so with the health ministry to promote e-health.

Moreover, he has come to an agreement with Iran's National Library and Archives to digitize their data and create an open data platform for the easy access of the public to crucial data which can assist startups in advancing their business ventures.

>Identified Problems

Hurdles hampering startups' growth in Iran are not limited to lack of investment or tax problems. Head of Information Technology Organization of Iran Rasoul Saraeian says one of the main problems is the widespread legal void on how to regulate startups' activities.

Saraeian says the administration has identified 15 deficiencies, two of which, namely tax and insurance, are the most pressing.

He added, "According to the Sixth Development Plan [2016-2021], the government is incapable of exempting startups from tax, but they are working on a compromise to allow for a three-year tax reprieve for those companies with annual revenue of less than five billion rials."

While the general consensus is that Iran needs to come up with rules and regulations to well manage this new form of business, several startup founders and owners, however, are content if the government simply does not throw obstacles in their way.