Corporate Law at Iraq
Corporate Law in Iraq: A Comprehensive Overview
Iraq's corporate legal framework is primarily governed by the Companies Law No. 21 of 1997, amended by Law No. 17 of 2019, alongside the Investment Law No. 13 of 2006. These laws establish the foundation for business operations, foreign investments, and corporate governance within the country.
🏢 Common Business Entities in Iraq
1. Limited Liability Company (LLC)
Ownership Structure: Requires at least 51% Iraqi ownership in Federal Iraq; 100% foreign ownership is permissible in the Kurdistan Region.
Shareholders: Between 2 and 25 shareholders, who can be individuals or legal entities.
Minimum Capital: IQD 1,000,000 (approximately USD 850).
Management: Managed by a General Manager, who may be a foreign national, subject to approval by the Ministry of Interior.
Public Subscription: Not allowed; shares cannot be publicly traded.
2. Joint Stock Company (JSC)
Ownership Structure: At least 51% Iraqi ownership in Federal Iraq; 100% foreign ownership is permissible in the Kurdistan Region.
Shareholders: Minimum of 5 shareholders.
Minimum Capital: IQD 2,000,000.
Public Subscription: Mandatory; part of the shares must be offered to the public.
Management: Governed by a Board of Directors, elected by the General Assembly.
3. Branch of a Foreign Company
Ownership Structure: 100% foreign ownership.
Activities: Limited to the scope of the parent company's activities.
Liability: The parent company is fully liable for the branch's obligations.
Registration: Requires approval from the Ministry of Trade and other relevant authorities.
📄 Company Formation Process
Name Reservation: Obtain approval for the company name from the Baghdad Chamber of Commerce.
Capital Deposit: Deposit the minimum capital in an Iraqi bank and obtain a receipt.
Documentation: Prepare and submit the Memorandum of Association (MoA), tax clearance letters, and other required documents.
Approval: Submit the application to the Registrar of Companies for review and approval.
Registration: Upon approval, the company is officially registered and issued a certificate of incorporation.
🌍 Foreign Investment Incentives
Ownership: Foreign investors can own up to 100% of a business in Iraq, subject to approval by the Iraqi National Investment Commission (INIC).
Incentives: Tax holidays, exemptions from customs duties, and guaranteed repatriation of profits and capital.
Protection: Investments are protected under Iraq’s investment law, with provisions for dispute resolution through international arbitration.
📊 Taxation and Compliance
Corporate Income Tax (CIT): 15% on taxable profits; a 35% CIT rate applies to oil and gas companies.
Financial Reporting: Entities must prepare financial statements in Arabic under the Iraqi Unified Accounting System (IUAS).
Tax Identification Number (TIN): Mandatory for all registered entities.
Compliance: Proof of compliance with social security, taxes, and other regulations is required for licensing and renewals.
⚖️ Legal and Regulatory Authorities
Registrar of Companies: Responsible for company registration and compliance.
Iraqi National Investment Commission (INIC): Oversees foreign investments and grants investment licenses.
Ministry of Trade: Handles commercial activities and foreign company branches.
Ministry of Interior: Approves foreign nationals for managerial positions.
General Commission for Taxes (GCT): Administers tax policies and enforces tax compliance.
📌 Key Considerations
Local Partnerships: Foreign investors are required to have at least 51% Iraqi ownership in Federal Iraq.
Sector-Specific Regulations: Certain sectors may have additional requirements or restrictions.
Legal Assistance: Engaging with local legal experts is advisable to navigate the regulatory landscape effectively.
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