The Iraqi government has issued new regulations (2 of 2017) concerning foreign branches in Iraq which replaces regulation 5 of 1989. The Regulation contains a number of important features, some of which are highlighted below.
The new Regulation abolishes representative office registration. All existing representative offices are now required to change the status of its registration to a branch within one year from the publication date of the Regulation in the Official Gazette. Another significant change is that companies can open a branch office in Iraq without the need for the company to have a contract or sub-contract with the government which was the requirement for registering a company under the old law.
This is an important development as the new law prohibited foreign companies from doing business in Iraq before registration and banned the public sector from dealing with unregistered foreign companies. The old law had previously allowed foreign companies to sign a contract or subcontract with the Iraqi government without registration on condition the company apply for the license within 75 days from signing the contract/subcontract with the government.
Further, the new law provides that a certificate of establishment issued to a branch office will not be considered a license to conduct commercial activities in Iraq, however, the branch will be licensed to carry out business in Iraq if it meets any of the following conditions:
- Has a contract with the Iraqi government, public or mixed sector bodies;
- Obtains an investment license in accordance with valid investment laws in Iraq;
- Obtains a business license from a competent authority in Iraq;
- Having a transaction with the private sector in Iraq provided the value is not less than USD 1 million.
The Companies Registrar has the power to cancel the registration license and delete the branch from its records if the branch has no commercial activities for 4 years or the branch fails to file accounts for two consecutive years without a legitimate reason.
The new Regulation was published in the Official Gazette on 31 of March 2017 and came into force on the same day.
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