The legal structuring of supply chain operations in Iraq involves the selection of an appropriate legal vehicle, registration with the competent authorities, and compliance with sectoral regulatory requirements. The structuring exercise engages the Iraqi Civil Code (Law No. 40 of 1951), the Iraqi Commercial Code (Law No. 30 of 1984), the Companies Law (Law No. 21 of 1997, as amended), the Investment Law (Law No. 13 of 2006, as amended), and the Commercial Agency Law (Law No. 79 of 2017). Each instrument prescribes substantive and procedural requirements that materially affect the operator’s tax position, ability to import, ability to contract with public entities, and exposure to local content and registration obligations.
Available Legal Vehicles
Operators establishing supply chain operations in Iraq may select among the following vehicles, each prescribed by the Companies Law:
- Limited Liability Company, with a minimum of one and a maximum of fifty shareholders
- Joint Stock Company, with a minimum of five shareholders and public-offering capacity
- Simple Partnership Company, and other partnership forms
- Sole Owner Enterprise, where the activity does not require a corporate vehicle
- Branch of a Foreign Company registered under the Companies Law and the Foreign Branches Regulation
- Trade Representation Office, the activities of which are limited to marketing and liaison and which may not engage in commercial activity generating revenue
The selection among these forms is dictated by the nature of the activity, the desired ownership structure, the capital requirements, the tax position, and the operator’s broader regional structuring.
Foreign Ownership and Capacity to Import
Under the Companies Law, foreign nationals and foreign entities may hold up to one hundred per cent of the share capital of Iraqi limited liability and joint stock companies, subject to sector-specific restrictions and to the registration requirements applicable to foreign branches. The capacity to import goods for trading purposes is, however, governed by Commercial Agency Law No. 79 of 2017, which provides that goods imported for trading purposes shall be imported through a registered commercial agent. Operators contemplating trading activity must accordingly structure their supply chain to engage a registered commercial agent or, where the activity qualifies, register their own commercial agency.
Investment Law Licensing
Where the supply chain project meets the eligibility criteria, an Investment Licence may be sought from the NIC or the relevant PIC under the Investment Law No. 13 of 2006. The licence confers a package of statutory incentives, including exemption from corporate income tax for a period of ten years (extendable in specified circumstances), exemption from customs duties on imported fixed assets, the right to repatriate capital and profits, and access to land use rights on preferential terms. The licence is conditional upon satisfying the minimum investment threshold, registering the project, and submitting periodic performance reports to the issuing authority.
Kurdistan Region of Iraq
Operations within the Kurdistan Region of Iraq (KRI) are governed by a parallel legal framework. The Kurdistan Region Companies Law and the Kurdistan Region Investment Law No. 4 of 2006 (as amended) regulate the formation of companies and the granting of investment incentives within the Region. Federal legislation that has not been ratified by the Kurdistan Parliament is not applied within the KRI; this includes, notably, the Commercial Agency Law No. 79 of 2017, with the consequence that commercial agency relationships in the KRI continue to be governed by the Old Commercial Agency Law No. 51 of 2000 together with the general provisions of the Iraqi Civil Code. Operators with cross-regional supply chain operations should structure separately for the Federal and KRI components.
Tax Framework
The tax framework engaged by supply chain operations comprises corporate income tax under the Income Tax Law No. 113 of 1982 (as amended), customs duties under the Customs Law No. 23 of 1984 and the Tariff Law No. 22 of 2010, the General Sales Tax on selected goods and services, and withholding obligations on payments to non-residents. The applicable corporate income tax rate is, in general, fifteen per cent, with sectoral variations. Investment Law licensed projects benefit from a ten-year exemption. Operators should structure intercompany flows with attention to the withholding rules and to transfer pricing considerations arising from related-party transactions.
Regulatory Permissions
Supply chain operations frequently engage sectoral regulatory permissions in addition to general commercial registration. Examples include import licences from the Ministry of Trade, sanitary and quality certifications from the Central Organisation for Standardisation and Quality Control (COSQC) under the Standards and Quality Control Law No. 54 of 1979, food safety registration with the Ministry of Health, pharmaceutical registration with the Iraqi Drug Registration system, and sector-specific licences for regulated goods. The applicable permissions should be mapped at the structuring stage and integrated into the operational launch plan.
Cross-Border Structuring
Cross-border structuring engages the relationship between the Iraqi vehicle and its foreign parent, sister entities, and counterparties. Common structures include direct holding by the foreign parent, intermediate holding through a regional vehicle in a jurisdiction with a favourable double taxation treaty position, and contractual structuring where equity participation is not feasible or commercially desired. The Iraqi Civil Code recognises freedom of contract under the law, and the parties may, subject to mandatory provisions of Iraqi law, select the governing law of their cross-border contracts under Civil Code.
How We Can Help
Etihad Law Firm advises on the legal structuring of supply chain operations in Iraq, including selection of the appropriate corporate vehicle under the Companies Law, registration of branches of foreign companies, Investment Law licence applications before the NIC and PICs, KRI structuring under the Kurdistan Region Companies Law and Investment Law, tax structuring, sectoral regulatory permissions, and the drafting of cross-border holding and operational documentation.