IRAQ: An Introduction to General Business Law
Overview
Iraq’s business environment is shaped by its evolving legal framework, economic dependencies and ongoing modernisation efforts. As the government works to attract foreign investment and improve infrastructure, businesses must adapt to regulatory changes.
Economic Conditions Impacting Clients & the Legal Profession
Iraq’s economy remains heavily reliant on oil, with price fluctuations affecting public spending and business opportunities. To reduce dependency, the government is promoting diversification in agriculture, manufacturing and renewable energy. Additionally, infrastructure projects like the Iraq Development Road aim to strengthen the financial sector and banking conditions. This initiative will enhance trade connectivity between the Grand Faw Port and regional routes, positioning Iraq as a key logistics hub.
Trends and Developments in Business Law
Iraq has been implementing legislative reforms to improve the business environment and attract foreign investment. The Companies Law, Law No 21 of 1997 (as amended) remains the primary legislation governing corporate entities in Iraq. The country is also working on updating its foreign investment regulations under Investment Law, Law No 13 of 2006, offering tax incentives and land leasing rights to foreign investors.
Additionally, regulatory reforms in banking and finance are facilitating increased participation from international financial institutions, improving access to capital for businesses.
Improvements and developments in financial and banking sectors
The financial and banking sectors in Iraq have witnessed significant improvements, driven by regulatory reforms and digital transformation initiatives. The Central Bank of Iraq (the “CBI”) has been actively working on modernising the banking infrastructure to align with international standards. Key developments include the following.
Banking modernisation
The Iraqi government, in collaboration with the CBI, has introduced reforms to enhance banking efficiency, including the expansion of electronic banking services and increased digital payment adoption.
Foreign investment in banking
Several foreign banks have been granted licences to operate in Iraq, increasing competition and improving financial services for businesses and individuals.
Strengthening financial regulations
Iraq has enacted new anti-money laundering and counter-terrorism financing regulations, ensuring compliance with international financial standards.
Expansion of financial inclusion
The government has launched initiatives to promote financial inclusion by encouraging banking access for individuals and businesses in underserved regions.
New legislation impacting clients
Taxation reforms and adoption of IFRS
Starting in 2025, Iraq is implementing comprehensive tax reforms, restructuring corporate tax policies and aligning financial reporting with IFRS on a trial basis. This shift aims to enhance transparency, attract foreign investment and ensure compliance with international accounting standards.
Labour Law updates
Recent changes to labour laws have strengthened employee rights and clarified employer obligations, particularly in areas such as social security contributions, minimum wage adjustments and contract regulations.
Dispute resolution
Iraq has updated its arbitration and mediation laws to streamline dispute resolution and reduce legal uncertainties for investors.
Social security
A new law mandates increased employer contributions and extends coverage to previously excluded workers, such as freelancers and informal sector employees.
Social security e-platform
Companies must now register and upload the required data on a digital platform for compliance.
Corporate compliance
Businesses must provide proof of compliance with social security, taxes and other regulations before processing requests for licensing, renewals or modifications.
Technological advancements
Iraq is actively adopting global technological innovations in regulatory and administrative processes to improve efficiency.
ICC presence in Iraq
Iraq has officially recognised and integrated the International Chamber of Commerce (ICC) into its business and legal frameworks, strengthening international trade regulations and dispute resolution mechanisms.
Investment opportunities and government focus
Renewable energy
Iraq is making significant strides in solar and wind energy, with ambitious targets for sustainable energy integration.
Agritech
Investments in smart farming, irrigation advancements and mechanisation are transforming Iraq’s agricultural sector.
Information technology and telecommunications
Increased investments in IT infrastructure, broadband expansion and fintech innovation are driving digital transformation.
Infrastructure and construction
Large-scale projects, including roads, bridges, airports and smart city initiatives are being developed through public-private partnerships.
Manufacturing and industrial development
Government initiatives support domestic production in cement, petrochemicals and construction materials, with special economic zones attracting foreign investment.
Iraq’s role in ESG
Iraq is implementing policies to improve sustainability, corporate governance and social responsibility.
I) Environmental commitments
Renewable energy is being adopted, gas flaring reduced and environmental regulations strengthened.
II) Social development
Investments are being made in education, healthcare, labour rights and gender equality.
III) Corporate governance
Anti-corruption laws are being strengthened and financial transparency improved.
IV) Green finance and investment
Initiatives such as green bonds and ESG-focused funds are being explored to attract sustainable investments.
Potential Hurdles and How Clients Can Overcome Them
Regulatory challenges
To navigate complex procedures and frequent changes working with local experts can streamline compliance.
Infrastructure limitations
Inconsistent utilities and logistical difficulties can be partially overcome by back-up power and reliable partners.
Financial constraints
Fintech solutions and secure payment methods can improve efficiency when it comes to limited banking access and reliance on cash transactions.
Workforce and skills gaps
Investing in training and collaborating with institutions can bridge the specialised skills gap.
Market adaptation
Understanding consumer behaviour and competition can be achieved by market research and strong customer engagement strategies which will subsequently help ensure competitiveness.
Conclusion
Iraq’s emerging sectors offer strong investment opportunities, driven by government efforts to diversify the economy. Improvements in regulations, infrastructure and foreign investment incentives are shaping its economic future. The increasing focus on ESG principles further enhances investment appeal and sustainability. Iraq’s evolving business laws present both opportunities and challenges. By staying informed and adapting strategically, businesses can successfully navigate the regulatory landscape and leverage economic growth potential.