To attract Foreign Investment into Iraq, generous benefits, guarantees and exemptions have been set out in Iraqi investment law, including:

10 years of tax exemption
Ability to repatriate investment and profits from investment
Ability to bring non-Iraqis into country to work on investment projects
Guarantee to not nationalize or confiscate investment
The Iraqi economy is undergoing a rapid transformation from a centrally based economy to a free market economy in which the private sector has a leading role in the economic development of the country
After 2003, Iraq took important steps towards enhancing the private sector through several legislative reforms which are described in the following presentation
Specified Benefits and Guarantees for Investors

Ability to invest capital brought into Iraq with related earnings in an exchanged currency after settling all obligations and debts to the Iraqi Government and all other parties
Permission to trade stocks and bonds listed on the Iraqi Stock Exchange
Ability to lease land for the life of the investment project or for a term no longer than 50 years. Extensions can be requested and obtained from the NIC for additional years based on need and economic considerations
Permission to insure the investment project with any Iraqi or foreign company which is considered suitable
Ability to open accounts for the licensed project in Iraqi and/or or foreign currencies with Iraqi or foreign banks
Permission for foreign investors and non-Iraqi employees of investment projects the right to reside in Iraq and to have unimpeded freedom of entry and exit
Protection from confiscation or nationalization of any part of an investment project covered by the investment law excluding legally obtained judgments against the project
Provision for non-Iraqis working for the investment projects to transfer their salaries and other compensation outside Iraq in accordance with the law after paying their obligations and debts to the Iraqi Government and other parties
Any amendment to this law will not have any retroactive effect on the guarantees and exemptions and rights decided thereupon
Allowed Exemptions

A project which has obtained an investment license from the NIC will enjoy exemption from taxes and fees for the period of ten years as from the date of start up of commercial operation
The NIC is required to increase the number of years of exemption from taxes and fees in direct proportion to the percentage increase of Iraqi investor participation in the project. The increase in years of exemption may reach a maximum of 15 years if Iraqi ownership exceeds 50%
Imported assets for an investment project are exempt from import fees provided that the assets shall have entered Iraq within three years of the date of the issuance of the license
Investment projects in hotels, tourist establishments, hospitals, health clinics, rehabilitation centers, educational and scientific organizations are granted additional exemptions from import fees of necessities required for modernization and renewal once every four years, provided that the necessities are used in the project within three years of the grant of the import license and that the items imported are not used for other than the intended purpose
Obligations of the Investor

To inform the NIC of the start up date of the commercial operations of the investment project
To maintain proper accounting records which will be audited by a licensed chartered accountant
To submit the economic feasibility studies and all technical studies to include all related maps of the project
To maintain special records for the imported materials
To preserve the environment
To adhere to Iraqi laws, proper quality control standards, and the submitted work schedules
Procedures to grant investment licenses and to establish projects

The “One Stop Shop” department in the NIC shall be responsible for the issuance of the investment license in accordance with the following steps required of the investor:
The investor submits a request to the NIC indicating a desire to invest and the area of intended investment
This request for a license shall be submitted on a standard form which can be obtained from the NIC directly or on their website
Submit a satisfactory credit recommendation from a certified bank
Provide the details of the investment project and its economic feasibility
Submit a time table for executing the project
In return, the NIC shall execute the investment license in a period of time not exceeding 45 days from the date of submittal after obtaining the approval of those ministry sections that are required to review project submittals
Investment on the Iraqi Stock Exchange (ISX)

The 2006 Law of the Investment No. 13 permits non-Iraqis to trade stocks and bonds listed on the ISX and to form investment funds to own stocks and bonds
The ISX has begun to install an electronic trading system to provide better transparency and rapid dissemination of information
These upgrades are designed to encourage private investment and provide liquidity for those investments by listing their securities on the exchange
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

Iraq’s Free Trade Agreement
Iraq has free trade agreements with Algeria, Egypt, Jordan, Lebanon, Oman, Qatar, Syria, Sudan, Tunisia, UAE and Yemen
Iraq signed a trade agreement with the United States on August 11, 2008 designed to improve trade and investment flows
Iraq is a member of the Multi Investment Guarantee Agreement (MIGA)
Iraq currently serves as an Observer in the World Trade Organization
The Free Zones (FZ) Law:

The FZ law No. 3 of 1998 allows industrial, commercial and service project investment in the FZ
Goods imported and exported from FZ are exempt from all taxes and duties except when imported through customs
All capital, interest and income generated from project investments are exempt from taxes and duties throughout the project’s timeline, including the construction and start up phases
Application for FZ projects requires submitting a request and paying 100 USD fee to the Free Zones Board

Iraq has four Free Zones:

1) Basra/Khor Zubar

2) Ninevah/Flaifil

3) Al-Anbar/Al-Qaem

4) Sulamanyia/Northern Iraq

The Free Zone Law enables the following activities in the Free Zones:

1) Industrial (production and sales) activities and assembling, manufacturing and repacking

2) Warehousing–re-exporting and trading

3) Warehousing services and various types of transportation

4) Banking, insurance and re-insurance

5) Supporting complementary and professional activities and services

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)

Iraqi banks with foreign shares:

Commercial Bank: 49% share by Al-Ahly Al-Muttahid Bank of Bahrain
Baghdad Bank: 49% share by Al-Khaleej Al-Muttahid Bank of Bahrain
Al-Ahly Bank of Iraq: 49% share by Export and Finance Bank of Jordan
Adre Essalam Bank: 70% share by HSBC
Al-Etiman Bank of Iraq: 75% share by National Bank of Kuwait
10% share by International Funding Commission

Al-Eqtisad Bank: 49% share by Al-Ayan Co. of Kuwait
Al-Mansour Bank: 60% share by National Bank of Qatar
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
Registering Companies in Iraq

The 1984 Law of Trade, No. 30 regulates all activities of private and public sectors for Iraqi investors

Trade is defined as the business activities aiming at interest through a series of sectors to include import/export trade, manufacturing, logistics, construction, tourism, banking, insurance, purchase and sale of stocks and bonds, and contracting

There are three steps to register a company:

1) Determine the Type of Company to Register

Companies according to the law of 1997 are divided into the following categories:
a. Stock Company–Private and Mixed:

Stock companies may to be founded by no less than 5 individual or corporate entities and can 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 invest in financial securities in Iraq. They are subject to the provisions of the Companies Law as a 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 investors, either individuals or corporate entities
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 Company–Private 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 State 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

3) Receive Approval of Registration Request

Two months for the stock company
20-25 days for all other types of companies
Customs Law

The Customs Law, No. 77 of 1955 initiated the rate of customs tariff imposed on goods imported to Iraq
This Law was suspended and replaced by the imposition of a 5% reconstruction fee on the value of goods imported to Iraq excluding: Food products, medicines, clothes, books and transit goods
Iraq operates on a harmonized customs system
Quality Standards

The Central Organization of Standardization and Quality Control is the sole body responsible for monitoring product standards in Iraq
This organization inspects local goods according to health and safety parameters
Iraq is also a member of the International Organization for Standardization which provides technical assistance with patents and intellectual ownership rights
Nutritional Health Requirements

The Ministry of Agriculture inspects all agricultural products and livestock and issues health certificates for livestock
The Ministry of Health inspects and issues health certificates for manufactured food products
Ministry Names and Websites

Ministries Website
National investment commision
Ministry of Industry and Minerals
Ministry of Electricity
Ministry of Agriculture
Ministry of Housing
Ministry of Trade
Ministry of Tourism
Ministry of Communications
Ministry of Health
Ministry of Transport
Amanat of Baghdad
Ministry of Municipality and Public Works

NIC Strategic Projects Description

Investment Regulation No.2 for 2009 has defined the National Investment Commission’s strategic projects as follows:

Projects related to infrastructure with capital no less than $50 Million or the Iraqi Dinar equivalent
Common projects between more than a single territory or non-territorial province
Projects related to the extraction of Natural Resources, considering what is stated in Article 29 for the Investment Law
Projects established under an agreement of which the Republic of Iraq is a party
Projects in the engineering, mineral, petrochemical and medical industries and the manufacturing of various types of vehicles provided that the capital of each are not less than $50 Million or the Iraqi Dinar equivalent
Projects that develop historic and archeological sites
Transportation projects such as roads, seaports, airports and railways, provided that the capital of each project are not less than $30 Million or the Iraqi Dinar equivalent
Power projects of 30 megawatt capacity or more
Irrigation, reservoir, and dam projects that irrigate no less than 20 thousand donums of land
Communications Projects
Projects of not less than $1 Billion or the Iraqi Dinar equivalent
Any strategic projects put forth by the Cabinet

Any other investment initiatives not having to do withthe projects listed above will be executed by the Provincial Investment Commissions

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