The regional government in northern Iraq, the KRG, is doing very well with the power granted by Iraq constitutional guarantees. There is a legal hierarchy between KRG law and national law. When there is a contradiction between regional and national legislation, local KRG legislation prevails.

A major difference between KRG investment law and the national law is that KRG law allows owning land whereas national law only allows leases of up to 50 years that can be extended.

The following information is applicable to investments exceeding $250,000.

Establishing a company in Iraq

When setting up a company in Iraq, 100 percent foreign ownership is allowed. There are several company types that the investor can choose from, according to the needs of the business. The capital of the company must be paid in full before the issuance of the certificate of establishment.

It takes around 15 days to form a company if all documents are submitted properly. The nomination of a legal consultant for the company is required when setting up a company.

There are some regulations to assist the employment of local staff. The new investment law states that Iraqi citizens should be given priority during recruitment, but does not establish any quotas. There are some exemptions for jobs which need certain skills and special education.

Investment licenses in Iraq

Investment licenses are issued within 45 days, provided that the application form is properly completed.

Central Bank of Iraq

Banking in Iraq is a hot topic. The country has a population of 30 million, but there are only 550 bank branches. The Central Bank of Iraq is the competent authority to grant licenses to banks and other financial institutions. The licensing period takes around six months to one year and there are numerous requirements. Comparing it to Turkish banking legislation, I would certainly say it is easier to obtain a license in Iraq.

So far, many foreign banks have been licensed by the Central Bank of Iraq, including a major Turkish bank, Ziraat Bankasi. We expect other Turkish, Asian and European banks to follow suit soon.

Although the legislation allows for it, many financial products are not yet being marketed.

Residence permits

Residence permits are usually granted in a couple of weeks with legal assistance.

Tax legislation

There are four types of tax in Iraq. These are: corporate tax (15 percent), personal income tax (raging from 3 percent to 15 percent), real estate gains tax (10 percent of annual revenue) and leased land tax (2 percent of the land value).

There are several tax incentives and subsidies for investments in Iraq. Investments exceeding $250,000 or its equivalent in IQD (Iraqi dinars) receive a tax exemption from fees and taxes for 10 years, beginning with the date of the start of the project. This period is renewable. Exemptions are also applied to office furniture and assets for expanding and modernising the project. The exemption period may be extended up to 15 years if the project complies with further requirements.

Repatriation in hard currency of profit and capital brought into Iraq is a major guarantee of the government.