Iraqi branch set up for an American Government contractor
Since 2003, Healy Consultants assists our multinational Clients with Iraqi business set up. In June 2021 our USA Client, contacted our Dubai office requesting our advice on registering an entity in Iraq, to fulfill a contract with the US embassy in Baghdad, Iraq. This Client is a US government contractor supplying facilities operation and maintenance manpower.
On 17 June 2021, after multiple video conference calls with Kunal Fabiani, our Dubai-based regional CEO, our Client settled our engagement fees (click link) and signed our engagement letter (click link).
- Our Client needed to register a company to finalise a contract with the US Embassy in Iraq and sponsor visas for foreign employees. The Client advised at this stage that no revenue would be generated by the Iraqi entity. After multiple phone calls it was concluded registering an Iraqi branch would be the optimum solution.
- Time was of the essence for our Client, who required branch incorporation numbers as quickly as possible, and no later than nine weeks. In our experience, registering a branch in Baghdad takes longer than this, and so on this occasion we agreed to register the branch in Basra. With this in mind, and to fulfil local statutory requirements, I e-mailed our Client a lease agreement for a virtual office address in Basra.
- To enable our Client plan in advance and ensure the engagement timelines were aligned to their deadline, Healy Consultants Group PLC emailed our Client a detailed project plan (click link), mapping out the step by step of this engagement including timelines and possible engagement challenges and solutions. As well as helping our Client clearly visualize the engagement, including estimated timelines and potential problems, it also enables the Client to prepare the necessary documents so that our team can complete the engagement in a timely manner.
- In the meantime, our Client supplied our in-house Legal and Compliance Department with the required Know Your Customer due diligence documents.
Attestation of documents
- Within 1 week, we drafted Iraqi branch incorporation forms, including Power of Attorney and Board Resolutions in English and Arabic. We also prepared a checklist of documents for our Client’s translation, notarization and attestation US Office of Authentications and the Iraqi embassy in the US.
- While our Client translated and attested the documents, we supplied our Client with detailed KYC documentation on our preferred passive nominee resident branch manager, to comply with the law.
- As expected, due to the Coronavirus pandemic and reduced personnel and working hours at the US Office of Authentications, it took our Client 4 months to complete the attestation of documents in the US and courier them to our affiliate office in Iraq.
- Upon receipt of the legalized documents, we completed attestation in the Iraqi Ministry of Foreign Affairs. Immediately after that, we submitted an application for branch registration to the Ministry of Interior (MOI) and Ministry of Trade.
- To comply with local regulations, it is mandatory that each company appoints a i) local legal advisor and ii) a local CPA and we submit their appointment letters to the Government. For a one-time appointment fee, Healy Consultants Group appointed our preferred legal advisors and CPA on our Client’s companies. Following 6 months, our Client is free to continue the working relationship with these firms or appoint alternative local companies. For transparency purposes, the monthly legal and CPA fees are payable directly and independently to these companies, independently of Healy Consultants Group.
- Our Client urgently needed to secure the certificate of registration for the branch. Although we decided to register the company in Basra to expedite company set up, in Iraq it is possible to expedite company registration applications by paying a government ‘VIP’ fee. Because our Client wanted to ensure COVID would not delay the registration, they decided to settle this Government “VIP” fees to ensure the certificate of registration would be issued on time. Upon settling this fee, we supplied a payment receipt as proof to our Client.
- Immediately after the certificate of incorporation was issued, we submitted the same to the Iraqi Tax Authorities to commence tax registration.
- Tax registration numbers were issued 1 week later, following which our Client could legally commence business operations, including hiring employees.
- Because our Client’s sole customer is the US Government and its contractors are US nationals, our Client did not need a corporate bank account in Iraq.
- That said, all local taxes are to be paid via a local corporate bank account to the Iraqi Tax Authorities. Consequently, our Client will transfer the requisite amount due to the authorities to fulfill all tax obligations and our local accounting partners will discharge the same on our Client’s behalf.
Engagement completionThroughout the engagement, my team and I supplied weekly detailed engagement status updates to our Client, advising progress and problems and solutions and attended video conference call meetings as often as required. Once all of the above was completed, we:
- explained to our American Client the i) Iraqi accounting and tax obligations and ii) legal and compliance considerations.
- Introduced the Accounting Department team members who will, going forward, assist our Client to timely, accurately and completely discharge the Iraqi branch’s accounting, audit and tax obligations.
- prepared a template sales invoice aligned to local Iraqi requirements displaying the branch registration and tax numbers.
- couriered a complete company kit containing i) the original of the branch registration documents ii) lease agreement for virtual office iii) legal consultant and local CPA appointment letters and iv) final paid invoice and v) a satisfaction questionnaire.
- requested our Client to supply a professional reference letter and online review to help improve our services and help us engage additional quality Clients.