Iraq Business Registration Guide

Company Registration — Ministry of Trade

• Registrar — Companies Registration Directorate: The company registration in Iraq is handled by the Companies Registration Directorate (مديرية تسجيل الشركات) under the Ministry of Trade. All the legal entities must be registered with this directorate before commencing the business operations.
• Types of companies: The common types include: the limited liability company (LLC) — the most common form, requiring at least 2 shareholders; the private joint-stock company; the public joint-stock company; and the sole proprietorship.
• Minimum capital: The minimum share capital for an LLC is IQD 1,000,000 (approximately USD 680). For the joint-stock companies, the minimum capital is higher.
• Process: The registration involves: the name reservation, the notarisation of the memorandum and the articles of association, the publication in the Official Gazette, and the issuance of the company registration certificate. The process typically takes 4–8 weeks.

For example: a foreign investor establishing an LLC in Baghdad must file the memorandum with the Companies Registration Directorate and obtain the registration certificate before the tax registration.

Tax Registration — General Commission for Taxes (GCT)

• Registrar — GCT: After the company registration, the business must register with the General Commission for Taxes (الهيئة العامة للضرائب) to obtain the Tax Card (البطاقة الضريبية). The Tax Card is the primary tax identification document.
• Required documents: The company registration certificate, the memorandum and the articles of association, the lease agreement for the registered office, and the Board of Directors resolution appointing the tax representative.
• Tax types: Upon the registration, the company is registered for: the corporate income tax (15%), the reconstruction tax, and the withholding tax obligations.

For example: a newly registered LLC in Baghdad submits the company documents to the GCT and receives the Tax Card within 2–4 weeks.

Reconstruction Tax Registration

• Additional registration: Iraq imposes a Reconstruction Tax (ضريبة الاعمار) on the corporate profits. The rate is typically a surcharge on the corporate income tax. The company must register for the Reconstruction Tax at the time of the GCT registration.
• Rate: The Reconstruction Tax is generally calculated as a percentage of the taxable income or of the corporate income tax payable. The exact rate depends on the industry and the applicable decrees.

For example: the Reconstruction Tax is registered together with the corporate income tax at the GCT office and is paid as a separate line item in the annual tax return.

Social Security Registration

• Mandatory registration: All the employers in Iraq must register with the General Commission for Retirement (هيئة التقاعد العامة) for the social security contributions. The registration must be completed within 30 days of hiring the first employee.
• Contributions: The employer contribution is 12% of the payroll, and the employee contribution is 5% of the gross salary (total 17%). The contributions are remitted monthly to the General Commission for Retirement.
• Penalties: The failure to register or the late remittance of the contributions may result in the penalties and the interest charges.

For example: an employer in Iraq must file the monthly contribution returns and remit the 5% employee and 12% employer contributions to the General Commission for Retirement.

KRG — Separate Ministry of Trade in Erbil

• Separate registration: The businesses operating in the Kurdistan Region must register with the KRG Ministry of Trade in Erbil, which operates independently from the federal Ministry of Trade in Baghdad.
• KRG registration process: The process is similar to the federal process but is handled by the KRG authorities. The company must obtain the KRG company registration certificate and the KRG Tax Card from the KRG General Tax Authority.
• Dual registration: A company that operates in both the federal Iraq and the Kurdistan Region may need to register in both jurisdictions, creating the dual compliance obligations.

For example: a company establishing a branch in Erbil must register with the KRG Ministry of Trade and obtain the KRG Tax Card, in addition to any federal registration.

Branch vs Subsidiary — Foreign Companies

• Branch: A foreign company may establish a branch in Iraq. The branch is not a separate legal entity and the parent company is fully liable for the branch's obligations. The branch registration requires the approval from the National Investment Commission (NIC) or the KRG Board of Investment.
• Subsidiary: A subsidiary (typically an LLC) is a separate Iraqi legal entity with the limited liability. The subsidiary is subject to the same registration and tax rules as the domestic companies. The subsidiary does not require the NIC approval unless it is in a strategic sector.
• Approval requirements: The foreign companies in the strategic sectors (oil and gas, banking, insurance, telecommunications) require the additional approvals from the sector regulators. The foreign ownership in some sectors is restricted.
• KRG Board of Investment: For the projects in the Kurdistan Region, the foreign companies may need the approval from the KRG Board of Investment. The KRG offers the investment incentives, including the tax holidays and the land grants, under the KRG Investment Law.

For example: a foreign oil services company may establish a branch in Baghdad with the NIC approval or a subsidiary in Erbil with the KRG Board of Investment approval.

FAQs

How long does the company registration take in Iraq?

The company registration in Iraq typically takes 4 to 8 weeks, depending on the type of the company and the completeness of the documentation. The registration in the KRG may be faster (2 to 4 weeks) in some cases.

Is the foreign ownership of the Iraqi companies restricted?

The foreign ownership is generally permitted in the most sectors, but there are restrictions in the strategic sectors (oil and gas, banking, insurance, media). The foreign investors should check the applicable Investment Law (No. 13 of 2006) and the sector-specific regulations.

What are the annual compliance requirements after the registration?

The company must: file the annual tax return (by April 30 for the individuals, or within 3–4 months after the fiscal year-end for the companies); file the monthly withholding tax returns; remit the monthly social security contributions; and file the annual audit report with the Companies Registration Directorate.