Foreign Market Entry in Iraq

1. Branch Registration of a Foreign Company: Foreign companies may register a branch to execute contracts or operate long-term projects in Iraq. Under Iraqi law:

• A branch may only be registered after obtaining a contract award, governmental approval, or project justification
• Branches are subject to:
  • Registrar of Companies registration
  • Tax Authority registration
  • Social Security registration
  • Sectoral licensing (when relevant)
• Branch profits are taxable and require a final tax settlement at project closeout
• Branches are commonly used for EPC, oil & gas, engineering, construction, defense, and telecom-related operations.

2. Incorporating a Local LLC in Iraq: Foreign investors may incorporate a Limited Liability Company (LLC) with:

• 49% foreign ownership and 51% owned by Iraqi shareholder
• Minimum shareholder: 2 shareholders
• Corporate approvals issued by the Registrar of Companies

LLCs are used for:

• Long-term service operations
• Local distribution and commercial agency
• Oilfield support services
• Logistics, contracting, and industrial projects

After establishment, the LLC must register with:

• Tax Authority
• Social Security
• Chamber of Commerce
• Sectoral regulators (if required)

3. Joint Venture Companies with Iraqi Participants: Foreign companies may form a joint venture with an Iraqi partner for:

• Market access advantages
• Regulatory requirements (sector-dependent)
• Local content compliance (especially in oil & gas and tendering)

JV structures may be:

• Contractual JV (unincorporated)
• Equity JV (incorporated LLC or JSC)
• Corporate governance, profit distribution, and exit provisions are typically defined in JV agreements.

4. Commercial Agency & Distribution: Under Commercial Agency Law No. 79 of 2017, foreign companies may appoint Iraqi agents for:

• Distribution
• Sales representation
• After-sales and warranty support
• Agencies must be registered with the Ministry of Trade – Commercial Agencies Registry and require legalized foreign principal documentation.

This model is common for:

• Industrial equipment
• Automotive products
• Oilfield tools and consumables
• Medical and pharmaceutical products
• Consumer goods

5. Free Zone & Special Zone Presence: Under Free Zones Law No. 3 of 1998, investors may establish companies or branches in Iraq’s Free Zones for:

• Customs-free import/export activities
• Warehousing and logistics
• Light industrial operations
• Goods entering Iraq’s domestic market are subject to customs duties, while goods exported abroad remain exempt.