Investment Law No. 13/2006 Benefits and Guarantees for Investors:
A Investor Incentives
Custom duties exemption
Protection from confiscation
Product marketing freedom
Full compensation in case of termination
Right to establish trade offices and branches in Iraq
Right to establish a business entity jointly with an Iraqi or foreign investor. The investor may collaborate with Iraqi partners
No restrictions on funds transfer in and out of Iraq including amount invested and profits
No previous liabilities
Entry and exit visas, and residency permits
B Those structures are supported by investment Law and are intended to make the environment friendlier for foreign investors
10+ year exemptions from all taxes and fees
Exemption of imported assets and spare parts for the investment project
Right to transfer capital, profits, and wages abroad
Opportunity to lease project sites for 50 years (renewable)
2 Law No. 22/1997: Allow transformation (SOEs) to public and for private share holding Companies.
Article No. 15 Para.3 (State Companies have the right to share or participate with other foreign Companies to implement work within its activities inside Iraq).
Advantages Enjoyed by the investors of Rehabilitation on Partnership Basis for (SOEs)
Well trained, experienced labor force.
Availability of major raw materials.
Reduced time to market due to the availability of markets and high local demands.
No Real Estate Expenses.
Clear cost advantage over imports.
Full support of the Government of Iraq: Investors are insured that their interests are in parallel to the government's interests. Both parties will have the incentive to rehabilitate and operate the factory to its greatest potential. The Ministry of Industry and Minerals will serve as an effective interlocutor between the investor's need and the government's requirement.
Fast return on investment.
Investors under Law No. 22/1997 (Rehabilitation) enjoy the same privileges granted to investors under Investment Law No (13)/ 2006.
3 Law No. 21/ 1997
for organizing private Companies on shareholding basis.
4 Law No. 91/1988
Organize Investment in Mining and Natural Resources.
5 Iraq's Bilateral and Multi-Party Agreements
Investment Guarantees and Protection Agreements
Iraq has 9 multiparty agreements within the Arab League.
Iraq has 32 bilateral agreements worldwide
6 Iraq's Free Trade Agreement:
Iraq is a member of the Multi Investment Guarantee Agreement (MIGA).
Iraq currently serves as an observer in the World Trade Organization.
7 Free Zones in Iraq
The Free Zones (FZ) Law: The FZ Law No. 3 of 1998 allows industrial, commercial and service project investment in the FZ. 3
Iraq has four Free Zones:
1 Basra/ Khor Zubar.
2 Nimevah/ Flaifil.
3 Al-anbar/ Al-Qaem.
4 Sulamanyia/ Northern Iraq.
8 Iraq's Banking System:
The current banking system in Iraq consists of 43 banks in addition to the Central Bank
The banks are distributed according to the ownership between seven governmental banks and 30 private banks including 7 Islamic banks and 6 licenses given to foreign banks
Banking investments are governed by the Law of the Central Bank of Iraq, No. 56 of 2004 and the Law of the Banks, No. 94 of 2004
The minimum capital requirement to establish a bank in Iraq is 100 billion ID (~ 85 million USD)
9 Trademark Protection
Investors register trademarks with the Trade Marks Registrar, Ministry of Industry and Minerals
The government protects some internationally recognized trademarks even if not registered in Iraq
Investors may transfer ownership and grant a license for use of a registered trademark
Iraqi laws protect registered trademarks for ten years, with the possibility to extend for ten additional years (must re-apply during 10th year)
Trademark owners may apply for renewal during the final 6 months of the trademark validity
10 Registering Companies in Iraq.
There are three steps to register companies:
1 Determine the type of Company to Register Companies according to the companies law No. 21, 1997 are divided into the following categories:
A Stock Company Private and Mixed:
Stock companies are to be founded by no less than 5 normal or corporate entities, who sell shares for public subscription
The shareholders, responsibility for the company's liabilities is at the nominal value of the shares they own
Iraqi law requires incorporating insurance, re-insurance and money investment companies in the form of stock companies
Founding shareholders must deposit their shares of the company's capital into an authorized Iraqi bank
Money investment companies can work as mediators to invest in financial securities. They are subject to the provisions of the Companies Law as any stock company, but their transactions are monitored by the Central Bank of Iraq
B Individualized Project:
An individualized company may be incorporated by a single person
The individual owner undertakes unlimited personal responsibility for all the company's obligations
The individualized company in Iraq is known as the "Individualized Project"
C Joint Company:
The joint company is incorporated by 2 to 25 individuals
The owners have shares in the company's capital
D Simple Company:
The simple company is incorporated by 2 to 5 investors either individuals or corporate entities
Each provides capital with either cash or in-kind contributions
The Companies Law requires that incorporation certificates of the simple company must be registered with the Notary Public
The owners of the simple company must deposit a copy of the incorporation instruments, to include names of shareholders and their numbers of shares, at the Iraqi Companies Registrar at the Ministry of Trade.
E Limited CompanyPrivate or Mixed:
The Companies Law states that the number of a limited company's founders is no less than 2 and no more than 25
The founders can be individuals or corporate entities and are responsible for the company's liabilities at the nominal value of the shares they own
The majority of the companies registered in Iraq are limited companies
It is permitted to incorporate a mixed company by the agreement between a single artificial person, or more, of the public sector and a single person, or more, of other sectors
If the contribution of the State sector drops below 25%, it is then considered a private company.
2 Meet Required Registration Procedures
A Register a trade name with the relevant trade chamber or the union of trade chambers
B Submit a signed contract by the founders, stating the name of the company, the activities and its capital
C Deposit the capital of the company, in ID, at an Iraqi authorized bank and notify the Companies Registrar
D Pay the required fees to the Companies Registrar
E Submit the subscription certificate, signed by the founders, and the company's feasibility studies
F Define the commercial and technical activities of the incorporating company to be included in the contract for incorporation
G Employ a legal advisor (attorney) for the company from the Bar Association in writing
H Employ a chartered accountant form the Chartered Accountants and Auditors Association
I Appoint a Executive Manager
J Obtain approval of the Minister of Interior for all foreign shareholders
Only stock companies, mixed and private, may issue shares liable for public circulation. The founders of the mixed stock company must have more than 30% but less than 55% of the nominal capital. The other shares are to be floated to the public within 30 days as of the approval by the Companies Registrar. If the Companies Registrar finds that the registration papers mislead the investors, he then refers the matter to the Financial securities Board.
11 Industrial Investment Legal Enhancements
1 Protect locally produced goods through tariffs on imported goods; 2009
2 Align existing arbitration law with International standards and best practices
3 Establish method of SOE privatization; Law on SOE Economic Reform
