Laws and Regulations Affecting Business in Iraq
Corporate registration. On February 29th, Trade Minister Ali Allawi signed new instructions for the registration of branch offices of foreign companies.
One important thing to note is that although the regulations highlight the nullification of the Commercial Agency Law No. 51 of 2000, the certificates of currently registered commercial agents will remain valid. As for new agents, new ministerial instructions will follow soon from the Minister of Trade.
On March 15, Trade Minister Ali Allawi signed new instructions for the registration of Iraqi companies (by either Iraqis or foreigners) to be in accordance with CPA Order 39 on foreign investment and the revised Company Law.
Registrar’s office is located in the Food Stuff Company Building, across
from the Iraqi National Museum, Area Allawi Hilla, Baghdad, Iraq, Grid
Foreign Investment. On September 21st Iraqi Finance Minister Kamil al-Gailani unveiled a new foreign investment law. The law permits 100% foreign ownership of businesses in all sectors except oil and mineral extraction. Foreign-owned retailing businesses must deposit US$100,000 in a licensed bank in Iraq before conducting business. The foreign investment law permits unrestricted, tax-free remittance of profits. Foreigners and foreign-owned companies cannot purchase land, but land can be leased for up to 40 years. Foreigners may purchase insurance for all aspects of investment. Contracts and disputes are subject to Iraqi law. The foreign investment law reiterates the equality of foreigners and Iraqis on all terms of investment.
Banking. The new banking law permits up to six foreign banks over the next five years the right to enter the Iraqi market. The Central Bank of Iraq on 31 January announced the selection of three foreign banks – Hong Kong Shanghai Banking Corporation, National Bank of Kuwait and Standard Chartered Bank - to proceed to the final stage of the foreign bank licensing process. An unlimited number of banks may purchase up to 50% of an Iraqi bank. Foreign banks may enter Iraq as branches, subsidiaries, representative offices, or through partnerships with Iraqi banks.
Taxes. The new tax law provides a maximum marginal income tax rate of 15% for both corporations and individuals.
Tariffs. The new law on trade provides for free trade and a temporary 5% tariff for reconstruction for two years. This tariff will cease no later than 1 January 2006. Food, medicine, clothing, and books are exceptions from this tariff.
Commercial laws. A summary of existing commercial laws under the previous government has been compiled by The Office of General Counsel of US Department of Commerce and is available here.