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Investing in Iraq under Investment Law No. 13 of 2006: Licences, Incentives, Land and Profit Repatriation

Iraq's Investment Law No. 13 of 2006, amended by Law No. 2 of 2010 and Law No. 50 of 2015, sets out the licensing system for investment projects and the incentives that come with a licence. This article explains which body issues licences, what the law offers on tax and customs, land, foreign staff and transfer of funds, where its limits are, and what foreign investors should check before applying.

Othman Al-JubooriOthman Al-Juboori, Iraqi lawyer, expert in Iraqi labour lawIraqi lawyer, expert in Iraqi labour law

Why the Investment Law matters

The Investment Law is not a general permission to do business in Iraq. It is a special regime: a project that obtains an investment licence gains privileges, guarantees and exemptions that ordinary companies do not have. A company that simply trades or performs a government contract usually operates under the Companies Law and sector rules instead (see the companion article on branches and subsidiaries).

The law applies to most sectors, but Article 29 expressly excludes investment in oil and gas extraction and production and in the banking and insurance sectors, which are governed by their own legislation. Article 34 provides that no text that contradicts the Investment Law is to be applied, which gives the law priority on matters it covers.

The licensing bodies

The law creates a two-level structure:

  • The National Investment Commission (NIC) in Baghdad (Article 4) sets national investment policy and is competent for strategic projects of a federal nature. It reports to the Prime Minister.
  • Investment commissions in the regions and in governorates not organised in a region (Article 5) issue licences for projects within their territory and coordinate with the NIC. The Kurdistan Region applies its own Investment Law No. 4 of 2006, discussed in the companion article.

Under Article 7, the Council of Ministers sets a minimum project capital by regulation, and the commission must obtain Council of Ministers approval before licensing a project valued at more than USD 250 million. The commission is required to decide on a licence application within 45 days of filing. For some sectors, implementing regulations allocate competence to the NIC; for example, power projects of 30 MW or more have been treated as within the NIC's exclusive jurisdiction under Investment Regulation No. 2 of 2009 (see the electricity article).

The One Stop Shop

Law No. 50 of 2015 strengthened the One Stop Shop mechanism (Articles 9 and 20). Representatives of ministries and relevant bodies sit in the One Stop Shop; each body must approve, reject with reasons, or request amendments within 15 days of notification, and silence is treated as approval. After a licence is issued, government bodies are required to cooperate to complete start-up requirements within 30 days. In practice, investors should plan for longer periods than the statutory ones.

What an application contains

Article 19 lists the core contents: the commission's application form; a financing plan supported by a source of funding from an accredited financial institution; the investor's track record inside or outside Iraq; project details and economic feasibility; and a timetable. A rejected applicant has reconsideration and objection routes within short deadlines (Article 20/Fourth), and ultimately recourse to the courts.

Incentives and exemptions

  • Tax and fee exemption a licensed project is exempt from taxes and fees for 10 years from the start of commercial operation, for each stage of the project (Article 15/First). This does not itself include customs duties, which are dealt with in Article 17.
  • Extension for Iraqi participation the NIC may increase the exemption period in proportion to the Iraqi investor's share, up to 15 years where the Iraqi share exceeds 50% (Article 15/Third).
  • Customs on assets assets imported for the project are exempt from taxes and customs duties if brought in during the establishment stages and before commercial operation (Article 17/First). Imports for expansion or modernisation, and spare parts up to 20% of fixed-asset value, also benefit under conditions (Article 17/Second and Third).
  • Misuse exempted assets sold or used outside the project trigger the taxes, fees and fines that would otherwise apply (Article 18).
  • No retroactive change amendments to the law do not retroactively affect guarantees, exemptions and rights already recognised (Article 13).

An exemption is not an exemption from compliance: Article 14 requires accounts audited by a certified accountant in Iraq, and tax filings may still be expected.

Land and real estate

Land is often the decisive issue. Article 10 provides that Iraqi and foreign investors enjoy the same privileges and guarantees, and then sets specific land rules:

  • State and public-sector land allocated for housing projects may be transferred into the investor's ownership, and private or mixed-sector land may be purchased for housing projects only.
  • For industrial projects, the published English translation of the amended law and Arabic texts in circulation differ on whether foreign investors may themselves own state land; investors should obtain the official Arabic text and confirm the position for their project before relying on ownership.
  • Investors may lease land from the state or the private and mixed sectors for up to 50 years, renewable with the approval of the licensing commission (Article 10/Third).
  • A non-disposal mark is placed on the title deed until the investor's obligations are fulfilled, and land must be used for the licensed purpose.
  • A project may be transferred to another investor during the licence term with the commission's approval once 40% of the project is complete (Article 10/Third/C).

Article 10 also bars investment in disputed territories in Kirkuk and Salahuddin until those disputes are settled.

Guarantees: foreign staff, expropriation and transfers

  • Repatriation under Article 11/First, the investor may take out the capital brought into Iraq and its returns, in a convertible currency, in accordance with the law and Central Bank of Iraq instructions, after paying taxes and debts owed to the Iraqi government and other bodies. Bank accounts in Iraqi or foreign currency may be opened inside or outside Iraq for the licensed project (Article 11/Fourth).
  • Foreign workers the investor may employ non-Iraqi workers where an Iraqi with the required qualifications is not available (Article 12/First), and foreign investors and non-Iraqi staff receive residency facilitation (Article 12/Second). Article 14 obliges the investor to train Iraqi staff and give Iraqis priority in employment, and to respect Iraqi law on wages, leave and working conditions as a minimum. Work permits and residency still follow the general labour and residency rules; these are covered in our separate labour-law series.
  • Expropriation the project may not be nationalised or expropriated except by a final judicial decision, and expropriation for public interest requires fair compensation (Article 12/Third).
  • Treaties foreign investors may benefit from additional rights under bilateral or multilateral agreements to which Iraq is party (Article 22).

Workforce and labour law

Investment-law projects remain subject to the general labour rules: Article 14 requires priority for qualified Iraqis, and under Instructions No. 1 of 2026 on foreign workers (Official Gazette No. 4863) a work permit follows a 15-day labour-market test and is issued for one renewable year. When granting an investment licence, the National Investment Commission takes into account that local labour is not less than 50% of the total workforce of the project (Article 30/First of Investment Regulation No. 2 of 2009). In 2024 the Council of Ministers decided that private-sector companies and companies contracted with the Ministry of Oil must employ at least 80% Iraqi staff, and the Ministry of Labour has stated that it applies this 80/20 ratio (INA, 3 December 2025; 964media, 28 September 2026); we have not seen the published text of the Cabinet decision, which practitioners cite as Decision No. 24832 of 2024. The ratio to plan on is no more than one foreign worker for every four Iraqi workers. Employers must register their staff under the Workers' Retirement and Social Security Law No. 18 of 2023, with contributions of 5% from the employee and 12% from the employer, and for foreign workers the employer also bears the State's 8% share (Article 14/Second/c). A social security clearance certificate is required for registrations, renewals, licences and other legal actions (Article 20), so it becomes relevant at licence renewal and on transfer of a project. In the Kurdistan Region, Council of Ministers Decree No. 172 of 2022 requires at least 75% local staff; see our articles on work permits for foreign workers and social security for employers, and our labour law page.

Disputes and enforcement of obligations

Article 27 provides that disputes are subject to Iraqi law and the jurisdiction of Iraqi courts, but the parties may agree on national or international commercial arbitration. Since Iraq's accession to the New York Convention (in force for Iraq from 9 February 2022), foreign awards falling within Iraq's reservations have a clearer path to recognition. Article 28 allows the commission to warn, fine (cumulatively up to 10% of project cost) and ultimately withdraw a licence for violations, including delays beyond the submitted schedule (Article 14/Seventh).

Practical checklist

  1. Confirm the activity is not excluded (Article 29) and identify the competent commission.
  2. Verify land status early, including occupants, zoning and disputes.
  3. Prepare a realistic timetable; delays can lead to penalties and licence withdrawal.
  4. Negotiate the dispute-resolution clause in the project contract.

Frequently Asked Questions

Does an investment licence replace company registration?

No. A licence grants privileges for a project; the investor still needs a legal vehicle (an Iraqi company or a registered branch) and any sector permits. Regulation No. 2 of 2017 on foreign company branches, as amended, lists signing an investment contract under the investment laws as one basis for a branch to carry on activity.

Is the 10-year exemption automatic?

It attaches to licensed projects from the start of commercial operation, but the investor must notify the commission when commercial activity begins (Article 14/First) and keep records of exempt imports.

Can profits be transferred abroad?

Yes, under Article 11, in a convertible currency and subject to Central Bank instructions and payment of taxes and debts. Banking practice and documentation requirements should be checked at the time of transfer.

Has the law been amended after 2015?

At the time of writing, we did not locate a further amendment enacted by the Council of Representatives after Law No. 50 of 2015. Investors should check the Official Gazette (Al-Waqai Al-Iraqiya) for any later changes.

Sources

This article is general information, not legal advice.