Practicing commercial activity in Iraq by foreigners

Foreigners in Iraq can carry out commercial activity in two ways. The first one, the “direct” one, is by opening a company branch according to “The System of Branches of Foreign Companies in Iraq No.2 of 2017”. The parent company can prepare and submit the required documents to the Ministry of Trade / Companies Register - Department of Foreign Companies (which is responsible for accepting and approving foreign companies’ documents to open branches.)

The documents required for accreditation purposes are: 

• A certificate of registration of the company in the mother country
• The company’s bylaws
• The final financial accounts for the last fiscal year
• A letter states the company’s decision to open a branch in Iraq and the branch manager’s appointment (while specifying his powers).

Note that the documents must be certified by the Iraqi embassy in the country of the parent company. The Iraqi Ministry of Foreign Affairs must then domestically approve that certification. The law also states that the parent company should have been conducting business for more than two years and should not have suffered financial losses during its last year.

The second way, the “indirect” one, was mentioned at the amendment of Article 12/2 of the Iraqi Companies Law No. 21 of 1997. The article permitted the foreign ownership of shares in joint-stock companies and national L.L.Cs, provided that it does not exceed 49% (while the Iraqi part shall own 51%.) The law enables the foreigner to be the acting manager or a member of the Board of Directors. The law also states that the Company’s General Assembly can choose the [foreigner] manager and grant him the needed powers to exercise his duties.

The difference between the direct and indirect ways (establishing an Iraqi company) is that the latter requires obtaining additional approvals from security authorities (registering and owning shares). This usually takes a longer time, especially since Companies Register - Department of Foreign Companies does not register the company without the security approvals

The economic freedom, opening up the country to the outside world, and the increasing investment opportunities all created a suitable atmosphere that allowed foreigners to practice their commercial and non-commercial activities in Iraq in a way that is even close to the Iraqi citizens. Laws applying to the foreigners have guaranteed this. This does not mean that the foreigners can work in all fields; some sectors and businesses remain “for-Iraqis-only,” such as tourism and commercial agencies. Except for these activities, the foreigners are treated like Iraqis in terms of taxes and fees, registering workers in the Social Security Department, and applying for government bids and projects.