Company Formation in Iraq
Updated on Saturday 17th February 2024
Rate this article based on 2 reviews
Company formation in Iraq can have many advantages, depending on the economic sector of interest. We invite you to discover more on the company types available here, the registration procedures and other important matters related to starting a business in Iraq.
The oil sector stands at the core of this country's economy and has provided most of its earnings from recent exports. Thus, many foreign investors decide to set up a company in Iraq. In order to complete this process as quickly and efficiently as possible, do not hesitate to address our company incorporation agents.
The oil sector stands at the core of this country's economy and has provided most of its earnings from recent exports. Thus, many foreign investors decide to set up a company in Iraq. In order to complete this process as quickly and efficiently as possible, do not hesitate to address our company incorporation agents.
Types of companies in Iraq
Foreign entrepreneurs should first choose the most convenient form of entity to be established. The main options are the limited liability company, the joint liability company, the sole owner enterprise or you can go opt for registering a branch, a representative or an agency office.
The most common type is the limited liability company and some of the demands to be met when opening a company of this kind in Iraq are to subscribe a minimum capital share of approximately $760 and to appoint a general manager that does not need to be an Iraqi resident, however, the appointment of the foreign manager has to be approved; the managing of the company by a board of directors is not needed.
Register a limited liability company in Iraq
One of the ways to open a company in Iraq is by registering the limited liability company, which is a common option for setting up a business. In the list below, our team of consultants in company formation in Iraq have prepared a short presentation on the characteristics of this structure:
- the legal entity is regulated by the Companies Law No. 21 of 1997;
- the minimum share capital is IQD 1 million (or aprox. $760);
- for specific business sectors, such as the oil industry, the minimum capital required is IQD 2 billion;
- the company can be incorporated by minimum 1 shareholder and maximum 25;
- in general, the process of company formation in Iraq can be completed in around 12 weeks.
This company type can have shareholders who can be natural persons or legal entities. Regardless of the type of shareholders to set up the company, and their number, the limited liability company gains legal recognition after signing the statutory documents, which, in this case, are represented by the Memorandum of Association.
Our team of consultants in company registration in Iraq can help you prepare and sign the Memorandum of Association following the applicable legislation. Additionally, our team can help you submit this document, along with all other registration papers, to the competent authorities.
What is the content of the Memorandum of Association?
The Memorandum of Association must contain specific provisions which are mandatory under the Iraqi legislation. While shareholders can introduce specific provisions of their own concerning the managing of the company, the document must include the following compulsory information:
- the legal entity of the company and its trading name;
- the registered office of the company, which must be located somewhere in Iraq;
- the type of activities developed by the company and purpose for which it was set up;
- the minimum share capital, the nominal value of the shares, the number of shares owned by each shareholder;
- information concerning each shareholder (address, name, nationality, etc.).
What are the main tax aspects businessmen should know about Iraq?
One of the most important matters when deciding to invest in a foreign country is the tax system imposed to businesses. Businesses are charged with the corporate income tax which, in Iraq, is imposed at the standard rate of 15%.
However, it must be observed that in specific economic sectors different corporate taxes can be charged. For instance, the oil and gas industries apply a tax of 35%, in accordance to the rules established by the General Commission for Taxes.
This tax is applied to all foreign businesses developing operations and other taxable activities in the oil and gas sectors. It is applied to foreign branches, offices and companies obtaining income from operations in Iraq.
According to the tax laws in Iraq, businesses which obtain an income derived from activities carried out on the country’s territory are liable to taxation, regardless of residency of entity. It is also important to know that the local legislation does not have a definition for permanent establishments.
Therefore it is advisable to request professional corporate advice in the case your business has established any business partnerships with local companies, that can potentially create the obligation to submit tax returns in Iraq.
How to register a company in Iraq
First you need to choose and then reserve a name for the company, one that has not been used before, at the Baghdad Chamber of Commerce. The name has to be Arabic. Then you need to hire a lawyer for the process of drafting the articles of association.
After that you must deposit the initial capital share required at a bank and receive a confirmation receipt. Then, from the General Commission of Taxation, you need to obtain the tax clearance of the shareholders.
Then, you must address the Companies Registry for the registration certificate. Some documents have to be submitted, such as a certified letter proving that you have deposited the share capital in a bank account.
Then, you must address the Companies Registry for the registration certificate. Some documents have to be submitted, such as a certified letter proving that you have deposited the share capital in a bank account.
The fifth step is making a company seal and a copy of the registration certificate, which is usually required for this procedure to be completed. Registering for taxes with the Tax Authority is another necessary step, and after that the legalization of the accounting books at the Accountants Union must be completed.
Lastly, when registering a company in Iraq, you need to register your employees for social security. The cost of this step depends on how many employees you have.
We invite you to find out more details on company registration in Iraq from our team. We also invite you to address us if you need assistance on offshore incorporation or if you need to open an offshore bank account.
For more information about forming a company in Iraq, please contact our company registration experts who will assist you in completing your personalized business plan in Iraq or in other countries.