Real Estate

Foreign nationals (natural persons and entities) are restricted from owning real estate in Federal Iraq. However, due to a supply shortage in the housing sector, the Federal Investment Law does make an exception by allowing an investor (which includes a foreign investor) to own land for the purpose of executing a housing project. The Federal Investment Law also increases the maximum term of a lease under the Civil Code from 25 to 50 years (renewable) to be decided at the discretion of the NIC.
It is important to note that commercial leases are usually required to be registered at the local municipality where the land is located.


Corporate Income Tax

Iraq’s tax law is set out in Law No. 113 of November 22, 1982 (as amended) (Income Tax Law). However, it is critical to note that not all articles of the law continue to be applicable and the force of the legislation is not always reflected in practice.

The Income Tax Law was designed to govern taxation throughout the entire territory of Iraq and all of the provincial regions of Iraq, and was ratified by the Iraqi parliament, including the Kurdistan Region of Iraq’s representation. In 2007, the Kurdistan Regional Government passed Law No. 26 to amend the application of the Income Tax Law in the Kurdistan Region of Iraq. However, the amendments were minor and, therefore, the law of taxation in the Kurdistan Region of Iraq remains largely similar to the rest of Iraq. Law No. 26 was further amended by Law No. 20 of 2011, which made some additional changes to deemed taxation, social contribution application, filing dates, and employee income taxation. The practice of the tax authority in the Kurdistan Region of Iraq differs significantly from the tax authority in Baghdad, namely the General Commission for Taxes (GCT).In general, corporate income tax is imposed on corporate entities and branches of foreign entities with respect to taxable profit from all sources arising or deemed to arise in Iraq (including the Kurdistan Region of Iraq). Income is deemed to arise in Iraq, and is consequently subject to tax, if any of the following is located there:

• The place of signing the contract by the party performing work under the contract (vendor or service provider)
• The place of delivery of goods or services
• The place of performance of work
• The place of payment for the work
Corporate Income Tax Rates and Taxable Income
The general corporate income tax rate applicable to all companies (except upstream oil and gas activities) is a unified flat rate of 15% of taxable income. Activities that relate to oil and gas production and extraction activities and related industries, including service contracts, will be subject to income tax at the rate of 35% of taxable income. The higher corporate income tax rate of 35% has not yet been adopted in the Kurdistan Region of Iraq and, therefore, the corporate income tax rate of 15% continues to apply to all companies in the Kurdistan Region of Iraq.
Corporate income tax is computed by applying the appropriate tax rate to taxable income, which is based on the profit reported in the audited financial statements (adjusted for disallowed expenses and tax exempt income), which must be prepared in accordance with the Iraqi Unified Accounting System (IUAS). The Iraqi tax authority may decide to accept the reported taxable profit or impose a deemed taxable profit figure based on a percentage of total revenue.

Retention/Withholding Regime

The Income Tax Law applies a withholding/retention system to all payments made to contractors and subcontractors. The party obligated to make payment under the contract is required to deduct and retain the applicable rate of tax from each payment, including the entire amount of the final installment under the contract. All retained amounts (except the entire amount of the final installment) should be transferred to the GCT within a month of the date of retention as a payment on account of the payee’s corporate income tax liability. The final installment shall remain with the payer until the payee presents the payer with a tax clearance, at which point the payer may release the retention to the payee. This retention and remittance process is not currently observed in the Kurdistan Region of Iraq.

Corporate Income Tax Administration

In Iraq, tax returns for all corporate entities must be filed in Arabic within five months after the end of the fiscal year together with audited financial statements prepared under the IUAS. Currently, the tax authority in the Kurdistan Region of Iraq only requires for the audited financial statements to be prepared using the IUAS and to be filed within six months after the end of the fiscal year.

After an income tax filing is made, the Iraqi tax authority will audit the filing made, may request additional information, and will eventually issue a tax assessment. Payment of the total amount of tax is due after the Iraqi tax authority sends the taxpayer the tax assessment based on the Iraqi tax authority’s audit of the tax return and the audited financial statements that were filed. If the tax levied by the GCT is not paid within the statutory time limit, penalties and interest are likely to be imposed.
Payroll Taxes: Employee Income Tax and Social Security
In Federal Iraq, employees’ income is taxed at progressive rates from 3% to 15%. The employer is responsible for withholding the income tax from the employees’ income for each month of the fiscal year, and for filing the monthly employee income tax return with the GCT.

In the Kurdistan Region of Iraq, a flat rate of 5% is applied to employees’ income above a monthly exemption of 1,000,000 Iraqi Dinars (IQD) (the equivalent of approximately USD 850).
In addition to the employee income tax, local and foreign employees should pay social security at a rate of 17% of basic salary on a monthly basis. The employer is responsible for paying 12% (25% for companies operating in the oil and gas sector) and the employee pays the remaining 5%. The higher rate of 25% has not yet been adopted in the Kurdistan Region of Iraq.

Other Major Taxes

The following table summarizes other major taxes that could be levied in Iraq:

Nature of Tax Rate (%)

  • Capital gains tax on sale of fixed assets 15 (35 for oil and gas sector, excluding the Kurdistan Region of Iraq)
  • Stamp duty – imposed on total contract value 0.2
  • Property tax – imposed on property’s estimated value 2
  • Real estate rent tax – imposed on the combined rental income from all real estate rented out by the lessor 9
  • Sales tax – imposed on first-class hotels, restaurants, and tourism related sales. 10
  • Customs duty – imposed on imports into Iraq 5 – 40

For further guidance on taxation in Iraq and the Kurdistan Region of Iraq, please visit:

Employment law

As a general rule, Arabic is the language recognised for all employment contracts. However, the Kurdish language is also recognised in the Kurdistan Region of Iraq. English may be included as supplemental, but the Iraqi courts are expected to rely on the Arabic version. The Labour Code, Law No. 71 of 1987 (Labour Code) governs Federal Iraq and the Kurdistan Region.
The Labour Code loosely defines “worker” as any person who performs work in return for wages, in the service of an employer and under the employer’s authority and supervision. A worker must have an employment contract which must contain a number of mandatory provisions, namely:
• be in writing;
• specify the nature of the work to be undertaken;
• specify the remuneration; and
• contain a term of duration (definite or indefinite).

The employment contract can be subject to probationary period provided this is expressly spelled out. Generally speaking, terminating an employee after expiry of the probationary period can be very difficult under the Labour Code. This is because there are categorised grounds based on which an employer may dismiss an employee (and it cannot be made without reason), and the procedure to be followed to effect termination is also cumbersome. If, after scrutinising the circumstances surrounding the employee’s dismissal, and the Iraqi court finds that it was unjustified, the aggrieved employee can look to the employer for damages suffered.
Under the Labour Code, employees should not work longer than 8 hours per day for 6 days per week (excluding a minimum 30 minutes break). Hours of work means the time during which the employer requires the employee to be at its disposal. With respect to holidays and sick leaves, an employee is entitled to 20 holiday days and 30 sick days for each year of employment.
Agreements with consultants and contractors can be entered into depending on the requirements of the business and job function. Such consultancy agreement (if legitimate) will be subject to the contractual provisions embodied in the Iraqi Civil Code (discussed in the following section).
Although the Labour Code prohibits a foreign employee from working without a work permit, on a practical level, the work permits (and residency permits) in Iraq have been effectively limited to large contractors who have direct contracts with the Iraqi Government. While the same privilege has been extended to sub-contractors of large contractors, it still requires the approval and sponsorship of the government contractors.

Iraqi civil law

From the time the Code of Hammurabi (Babylonian law code of ancient Mesopotamia) was established in 1754 BC, Iraq’s legal system, like everything else in its tumultuous history, has been in constant evolution since its inception.
Iraq’s modern source of civil law is for the most part based on a civil code that derives its influence from the Mejelle (civil code of the Ottoman empire) and the Egyptian Civil Code. The Ottoman codifications were mainly adaptations of European codes, with significant foundation stemming from French codifications and French substantive law. On the other hand, the Egyptian Civil Code incorporated French law more completely.
Iraq’s Civil Code, enacted in 1951, compiled a single instrument of principles derived from the Mejlle and the Egyptian Civil Code, and unified them with pre-existing Islamic laws. Essentially, the Iraqi Civil Code represents a synthesis of traditional Arab legal rules fused with modern developments to cater for the conditions and needs under which the Civil Code came into existence. Article 1 of the Iraqi Civil Code makes it clear that the legislation is the primary source of law and takes precedence over custom, Islamic law (Shari‘a) and equity.

Intellectual Property Rights

Prior to the creation of the World Trade Organisation and the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) in 1994, Iraq had enacted several laws to deal with all areas of intellectual property rights (IPR). For instance, Iraq has signed the Convention establishing the World Intellectual Property Organization (WIPO) in 1971 (and became a member in 1976) and has joined the Paris Convention for the Protection of Industrial Property 1976. However, to date, Iraq has not yet become a member of the WTO, as one of the conditions to joining the WTO is the enactment of regulations that comply with the TRIPS.
However, since 1994, the previous Iraqi regime devoted little attention to or showed interest in developing IPR-related regulations to keep pace with global advances. Significant treaty developments such as the Patent Cooperation Treaty (PCT), the Patent Law Treaty, and the Strasbourg Agreement relating to International Patent Classification, remain a low priority task for the Iraqi authority given the security and economic issues facing the country.


Iraq’s trademark regulation is one of the oldest in the Middle East, dating back to 1931 when it was first passed. In 1957, the Trademark Law No. 21 replaced the trademark regulation of 1931. Further amendments followed in 1968 by Law No. 214, and again in 2004, by CPA Order No. 80 renaming the Law to the Trademarks and Geographical Indications Law (Trademarks Law).
“Trademark” is defined as any sign, or any combination of signs, capable of distinguishing the goods of one undertaking from those of other undertakings. The Trademark Law also extends to registration of signs not intrinsically distinctive but acquired uniqueness through trade use. CPA Order No. 80 also introduced new concepts such as “Service Mark” (a sign used to identify and distinguish the services of one person from another), “Certification Mark” (a sign used by a person other than its owner to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of such person’s goods or services) and “Collective Mark” (a trademark or service mark used by the members of a cooperative, an association, or other collective organisation, and includes marks indicating membership in a union, an association, or other organisation).
To register a trademark, an applicant needs to submit an application to the Trademark Registration Office at the Iraq Ministry of Industry and Minerals. In the Kurdistan Region of Iraq, the Kurdish Ministry of Trade and Industry has developed its own registration procedure to register trademark applications. It is best to file two applications in Baghdad and Erbil to ensure full protection is secured in both jurisdictions (assuming the company’s operations cover all of Iraq’s territory).
Once a trademark is registered, its validity will last for a renewable period of ten years (which was reduced from 15 years by CPA Order No. 80).
Infringement of a registered trademark constitutes a criminal offence, making violators liable to not only civil action but also criminal prosecution. A trademark owner may also rely on provisional measures, which extends to seizure of the instruments and tools used in the commission of the offence as well as the products, goods, wrapping materials, stickers, etc., which bear the mark of the subject matter of the offence.
If convicted, offenders will face imprisonment between one to five years and/or fines between IQD 50,000,000 to IQD 100,000,000. For repeated offenders, the minimum prison term is raised to five years and the maximum to ten years and/or a fine between IQD 100,000,000 to IQD 200,000,000.


Iraq’s Copyright Law No. 3 was passed in 1971 and later amended in 2004 by CPA Order No. 83. The amendments modernise the Copyright Law and grant an author copyright protection during his/her lifetime plus another 50 years from the author’s death.
The Copyright Law protects the authors of original literary, artistic and scientific works, whatever their type, method of expression, importance and purpose. CPA Order No. 83 extends the protection to include the works whose method of expression is in writing, sound, drawing, painting, or movement, and provides a list of specific material covered, which prior to the 2004 amendment, did not include “computer programs”.
Without the written permission of the author or his/her successors, no person is allowed to reproduce the copyrighted work; translate, adapt, musically arrange or otherwise transform a pre-existing work; authorize commercial rental to the public of the work; distribute a work through sale or other means of transfer of ownership; import any copies of a work; and transmit or otherwise communicate a work to the public.
CPA Order No. 83 also introduced certain protections and rights to performers, including an exclusive economic right for the exploitation of their performances for a period of 50 years calculated from the date on which the performance or the recording took place. Some of these rights were also extended to producers of sound recordings, which similarly enjoy the right to exploit their recording for 50 years, and broadcasters, who enjoy an exclusive right to exploit their programs for a period of 50 years.
A copyright infringement is considered an act of piracy punishable by a fine not less than IQD 5,000,000 and not exceeding IQD 10,000,000. Repeated offenders face more drastic punishments of imprisonment of not less than five years and not more than ten years and/or a fine of not less than IQD 100,000,000 and not more than IQD 200,000,000.
CPA Order No. 83 gives the Iraqi court wider powers to order the forfeiture and destruction of all infringing copies or sound recordings; close the establishment used by counterfeiters to commit the offence; order injunctive relief, including ordering the infringer to cease infringing activities, confiscate the infringing copies and any materials and devices used in the commission of the infringement, and confiscate the proceeds of the infringement; and award damages against the offender.


Iraq’s Patents, Industrial Design, Undisclosed Information, Integrated Circuits and Plant Variety Law No. 65 (Patents Law) was enacted in 1970 after replacing Law No. 61 of 1935. The Patents Law was first amended in 1999 (according to Law No. 28), and then again in 2002 by Law No. 5 and in 2004 by CPA Order No 81.
The Patents Law grants the registered owner of the patent protection for its “invention” (which covers new processes and products) from unauthorised use, exploitation, production, sale or importation. The Patents Law does include some exclusions which apply to any invention that contravenes public morals, order or interests.
The Patents Law requires an invention or process to satisfy three conditions, namely novelty, an inventive step, and capable of industrial application. Novelty contains certain restrictions and these are set out in the Patents Law. With respect to duration, the Patents Law provides a 20 year non-renewable protection period from the date of filing the application.
Foreigners residing and having an actual place of business in Iraq may file an application for registration under the Patents Law. Foreigners who reside outside Iraq may still apply if they are citizens of a State that is party to a convention to which Iraq is, and such convention allows for registration of foreign inventors.
Since Iraq is a member of the Paris Convention, priority is considered in applications for patents, but international registrations are not considered registered in Iraq because it is not a member of the Patents Cooperation Treaty.
In the event of infringement of a registered patent, the available remedies to an aggrieved patentee include search order, seizure order (this is particularly effective), injunction to prevent further infringement, assignment of ownership of the goods seized, and damages.