Business entities in Iraq

The most commonly registered business entities in Iraq are the limited liability company (LLC), the branch office and the representative office. Alternatively, our Clients will have the option of setting up a joint stock company (JSC) or establishing their business presence through a joint venture (JV) with another locally incorporated business. Healy Consultants will assist our Clients with choosing the optimum corporate structure, keeping in mind their business needs.

• The Iraqi Limited Liability Company

  

  • The Iraqi LLC can be setup with 1 director and 1 shareholder, both of whom can be non-resident foreign nationals. While corporate shareholders are permitted, corporate directors are forbidden. Furthermore, fully paid up share capital of US$860 must be deposited prior to company registration;
  • Before any foreign national/entity can become the director or the shareholder of the company, they must go through a security check conducted by the Iraqi Ministry of Interior (MOI). This process takes approximately 4 months for completion;
  • In an LLC, the shareholders enjoy the right of pre-emption in regards to transfer of shares.

• Branch Office

  • Foreign companies are permitted to open their branches in Iraq i) if they have been awarded a Government contract or ii) if they are working with a company which is contracted by the Government. The contract awarded must be for a project funded through the Federal Budget of Iraq;
  • While the branch office can only pursue business activities within the scope defined by the parent company, it will still be allowed to invoice local customers, sign local sales contracts and receive income from customers.
  • Please click here to view a related case study.

• Representative office

  A representative office cannot pursue any business activities in Iraq. It is only allowed to engage in i) business development and ii) market research on behalf of the parent company. However, if the parent company is awarded a business contract by the Iraqi Government, the parent company may convert its representative office to a branch office.

• The Iraqi joint stock company (JSC)

  • Our Clients may choose to incorporate a joint stock company if they wish to raise capital from the public. For this Iraq business setup, at least 5 directors and 5 shareholders will be required, who can be of any nationality. All directors are required to own at least 1,000 shares in the company;
  • The minimum initial capital required to setup a JSC will be US$1,720. However, it is possible that the clerk at the Commercial Register may request the shareholders to increase their capital amount if he/she deems it to be lower with regards to fulfilling the objectives of the company.

• Joint Venture Company

  • Our Clients can choose to setup a Joint Venture (JV) in Iraq by incorporating an LLC or a JSC with another local (privately owned or government owned) or foreign company. For this purpose, all parties involved must conclude a shareholder agreement prior to company incorporation;
  • This Iraq business setup offers foreign entrepreneurs the following benefits: i) access to tried and tested sales networks ii) availability of market knowledge for better understanding iii) assistance with completing bureaucratic requirements and iv) access to business relationships for legal, banking and finance purposes.

• Table of comparison between different Iraqi entities

  	LLC	JSC	Branch office	Rep office
  How long to set the company up?	5 weeks	5 weeks	6 weeks	6 weeks
  How long to open company bank account?	5 weeks	5 weeks	6 weeks	6 weeks
  Minimum share capital required at incorporation	US$860	US$1,720	US$0	US$0
  Allowed to sign sales contracts with Iraqi Clients?	Yes	Yes	Yes	No
  Allowed to invoice Iraqi Clients?	Yes	Yes	Yes	No
  Corporate tax payable in Iraq	15%	15%	15%	0%
  Corporate bank account	Standard Chartered	T.C. Ziraat Bank	Vakif Bank	Standard Chartered
  Can rent office in Iraq?	Yes	Yes	Yes	Yes
  Tenancy agreement required before incorporation?	No	No	No	No
  Allowed to import raw materials?	Yes	Yes	Yes	No
  Allowed to export goods?	Yes	Yes	Yes	No
  Can the entity hire expatriate staff in Iraq?	Yes	Yes	Yes	Yes
  Do you visit Iraq for company incorporation?	No	No	No	No
  Resident director/manager required?	No	No	No	No
  Resident shareholder required?	No	No	No	No
  Minimum number of directors	1	5	0	0
  Minimum number of shareholders	1	5	0	0
  Individual shareholders allowed?	Yes	Yes	No	No
  Corporate shareholders allowed?	Yes	Yes	Yes	Yes
  Corporate director(s) allowed?	No	No	No	No
  Public register of shareholders and directors	Yes	Yes	Yes	Yes
  Statutory audit required?	Yes	Yes	Yes	Yes
  Annual tax return to be submitted?	Yes	Yes	Yes	Yes
  Total business setup costs in Year 1	US$31,925	US$30,800	US$31,925	US$19,550
  Subsequent annual costs (incl. accounting & tax)	US$15,450	US$13,450	US$15,450	US$10,400
  Draft invoice	View invoice PDF	View invoice PDF	View invoice PDF	View invoice PDF