In the name of the people

The Presidency Council

Pursuant to what was approved by the Council of Representatives and endorsed by the

Presidency Council and based on the provisions of paragraph (First) of Article (61) and

paragraph (Third) of Article (73) of the Constitution, the following law is promulgated:

No ( ) of 2006

The Investment Law

1-Chapter One / Definitions

2-Chapter Two /The National Commission for Investment and the

Investment Commissions in the Regions and Governorates

3-Chapter Three /Privileges and Guarantees

4-Chapter Four /Investor Obligations

5-Chapter Five /Exemptions

6-Chapter Six /Procedures for Granting Investment and

Project Establishment License

7-Chapter Seven /General Provisions

Chapter One

Definitions

Article (1)

The following terms, wherever mentioned in this Law, shall have the following specific

meanings unless the context indicates otherwise:

A. The Council: The Council of Ministers

B. National Commission for Investment: The Commission established in

accordance with this law responsible for drawing up the national policy and

laying out its guidelines and monitoring the implementation of these

guidelines and instructions in investment. It shall specialize in investment

projects of a federal nature exclusively.

C. Region’s Commission: The investment commission of the region responsible

for granting investment licenses in the region.

D. Governorate Commission: The investment commission of the governorate

not organized in a region responsible for investment planning and granting

investment licenses in the governorate.

E. The Commission: The National Commission for Investment or the Region’s

Commission or the Governorate Commission as the case.

F. Chairman of the Commission: The Chairman of the National Commission

for Investment

G. The Project: The economic activity subject to the provisions of this law.

H. The Assets: The tools, apparatuses, equipments, machineries, requirements,

gear, transportation means and office furniture specified for exclusive use in

the project, and the furniture, furnishings and the requirements of the hotels,

tourist cities, hospitals, schools and colleges

I. The Foreign Investor: Is the investor who does not hold the Iraqi nationality

in the case of a real person, and is registered in a foreign country in the case of

a juridical or legal person

J. The Iraqi Investor: Is the investor who holds Iraqi Nationality in case of a

real person and is registered in Iraq in the case of a juridical or legal person.

K. Taxes and Fees: All types of taxes and fees levied in accordance with the

applicable laws.

L. The designed production capacity: Is the production capacity designed

within a specific unit of time (hour, unit, day … etc) in accordance to what is

fixed in the documents incoming with the machines of the supplier.

M. Investment Portfolio: A collection of investments in shares and bonds.

N. Investment: Is the investment of capital in any economic or service activity or

project that results in a legitimate benefit for the country.

Goals and Means

Article 2

This law aims at the following:

First: To promote investment and transfer modern technologies in order to

contribute to the process of developing and enhancing Iraq, and expanding and

diversifying its production and service base.

Second: To encourage the Iraqi and foreign private sector to invest in Iraq by

providing the required facilities for establishing investment projects and

enhancing its competitive capacities in the local and foreign markets for projects

included in this law.

Third: To develop human resources based on market demands and provide work

opportunities for the Iraqis.

Fourth: To protect the rights and properties of investors.

Fifth: To expand exports and improve the balance of payments and the balance

of trade of Iraq.

Article 3

The following means shall be adopted to realize the objectives of this law:

First: To grant projects covered by the provisions of this law the necessary

privileges and guarantees for its continuation and development by providing

support in a way that enhances the competitive capacities of these projects in the

local and foreign markets.

Second: To grant projects that obtained an investment license from the

Commission, additional facilities and exemptions from taxes and fees in

accordance with the stipulations of this law.

Chapter Two

The National Commission for Investment and the

Investment Commissions in the Regions and Governorates

Article 4

First: A Commission shall be established and called the “The National

Commission for Investment”. It shall enjoy a juridical personality and shall be

represented by the Chairman of the Commission or the person authorized by him.

It shall be responsible for drawing up the national policies for investment and

drawing up its plans, regulations and guidelines as well as monitoring the

implementation of these guidelines and instructions in investment. It shall

specialize in strategic investment projects of a federal nature exclusively.

Second: The National Commission for Investment” shall be managed by a Board

of Directors comprised of nine members who must be competent and specialized,

and hold a college degree that suits the specialty of the Commission. They must

not have been sentenced for a felony or misdemeanor of moral turpitude, or have

declared their bankruptcy

Third:

A. Upon a request by the Prime Minister, the Council of Ministers shall

nominate a Chairman of the Commission at a grade of Minister and a

Deputy Chairman at a grade of Deputy-Minister for a period of five years

and present them to the Council of Representative for approval.

B. The Prime Minister shall appoint four members for a period of five years

at a grade of Director General.

C. The Prime Minister shall select three members from the private sector for

five years after their nomination by Chairman of the Commission and

specifying their compensations according to the bylaws.

D. At the conclusion of the membership of any member of the Commission

referred to in Paragraph (A and B) of this Article in cases not involving

dismissal and resignation, the Prime Minister shall assign them to any

governmental entity at the same grade. Those mentioned in (A) of this

article shall be retired on pension when not assigned to a government

position equivalent to their grade.

E. The Council of Representatives may directly dismiss the Chairman of the

National Commission for Investment and his Deputy, or upon a request by

the Prime Minister for compelling reasons.

F. The Council of Ministers may dismiss or replace any member of the

Commission or replace him with others in case he does not adhere to the

standards and regulations of the Commission.

G. The Board of Directors of the National Commission for Investment shall

meet at the invitation of its Chairman. A bylaw issued by the Commission

shall specify the quorum, decision taking, making recommendations and

the course of work of the Commission and any other issue.

H. The National Commission for Investment shall be connected to the Prime

Minister.

I. The salary scale and entitlements of the Commission’s employees shall be

determined by a decision of the Prime Minister based on a proposal from

the Chairman of the National Commission for Investment.

Fourth:

The Commission’s headquarters shall be in Baghdad and it may appoint

representatives in the regions and governorates.

Fifth: The National Commission for Investment shall draw up an overall national

strategic policy for investment identifying the more important of the sectors and

shall prepare a map of investment projects in Iraq in the light of the information it

receives from the regions and governorates. It shall also prepare lists of

investment opportunities in strategic and federal investment projects with initial

information about these projects and making it available to those wishing to

invest.

Article 5

First: The regions and governorates not organized in a region may form

investment commissions in their areas. The latter shall enjoy the powers of

granting the investment licenses, investment planning, promoting investment and

opening branches in their areas within the provisions of this law in consultation

with National Commission for Investment to guarantee the availability of the

legal conditions.

Second: the Investment Commissions of the regions and governorates shall be

composed of at least seven members including the chairman and the vice

chairman of at least seven years of experience and competence and with a

university degree appropriate to the specialization of the commission and not

convicted in a felony or a misdemeanor involving turpitude or has declare his

bankruptcy.

Third: The regions and governorates not organized in a region shall establish a

mechanism of forming the investment commission of the region and the

governorate and removing the Commission’s members in case he/she does not

adhere to the standards and charters of the Commission in a way which is not in

conflict with the provisions of this law.

Fourth: The Investment Commissions of the regions and governorate shall

coordinate their work with the National Commission for Investment, and shall

coordinate and consult with local governments regarding investment plans and

facilities.

Fifth: The regions and governorates commissions shall draw up their investment

plan in a way that does not contradict with the federal investment policy and shall

prepare list of the investment opportunities in the areas that are subject thereto,

with initial data about these projects and offer it to those wishing to invest.

Sixth: The region’s Commission shall be connected to the Prime Minister of the

region and is subject to the scrutiny of the region’s Council. The governorate

commission shall be connected to the Governor and is subject to the scrutiny of

the governorate council in way that does not contradict with the provisions of this

law.

Seventh: Regions and Governorates Commissions board of directors shall convene

upon an invitation from their chairman. The quorum of convening and adopting

resolutions and recommendations shall be determined by absolute majority. The

conduct of work shall be organized by by-laws issued by the Commission.

Article 6

In addition to ordinary correspondence, the Commission may adopt electronic mail with

the official entities connected with the work and activity of the Commission through local

networks or the Internet according to guidelines set by the Commission.

Article 7

A. The Commission shall accept investment license requests for projects whose

capital is not less than the minimum amount determined by the Council of

Ministers or the Council of Ministers of region as the case, by a regulation issued

based on a proposal by the Commission.

B. The Commission must obtain the approval of the Council of Ministers before

granting the license if the value of the investment project is more than two

hundred and fifty million dollars.

C. The Commission shall make its final decision concerning the requests of

investment license within a period not exceeding (45) forty five days from the

date of filing a request.

D. The decisions of the Commission regarding the approved investments projects

shall be obligatory for the purposes of this law.

Article 8

The Commission shall have an independent annual budget whose revenues shall be made

up of its allocated amounts in the State General Budget.

Article 9

The Commission shall promote investment by working on the following:

First: Building confidence in the investment environment, identifying investment

opportunities, and promoting and stimulating investment in them.

Second: Simplifying the procedures for registration, issuing of investment

projects licenses, and following up on existing projects and giving them priority

in processing with the official entities. Completing the procedures of answering

investor requests and obtaining the required approvals for the investor and the

project.

Third: Establishing one window at the National Commission for Investment and

the Regions and Governorates Commissions, which includes authorized

representatives from the ministries, and members nominated by the Councils of

the regions and governorates as the case and the concerned authorities to

undertake issuing licenses and obtain the approvals of other authorities in

accordance with the law.

Fourth: Providing advice, information, and data to investors and issuing special

manuals in this regard.

Fifth: Setting forth and implementing programs to promote investment in

different areas of Iraq in order to attract investors.

Sixth: Facilitating the allocation of the needed lands and renting them out for

establishing projects for a sum to be determined by the Commission in

coordination with the concerned authorities.

Seventh: Establishing secure and free investment areas with the agreement of the

Council of Ministers.

Eighth: Encouraging Iraqi investors (residing in Iraq) through providing them

with easy loans and financial facilities in coordination with the Ministry of

Finance and with the assistance of Banking Institutions, provided that the investor

obtaining the loan shall employ a number of unemployed Iraqis proportional with

the volume of the loan.

Ninth: Any other tasks related to its work and assigned by the Council of

Ministers.

Chapter Three

Privileges and Guarantees

Article 10

The Investor irrespective of his/her nationality shall enjoy all privileges, facilitations and

guarantees and shall be subject to the obligations stated in this law. The Iraqi and foreign

investor shall have the right for, the purposes of housing projects, the use of the land for a

sum to be determined between him and the land owner without land speculation

according to conditions set forth by the National Commission for Investment and the

approval of the Council of Ministers. The Commission shall facilitate the allocation of

the required lands for the housing projects. The housing units shall be allocated for

ownership by the Iraqis after the completion of the project.

Article 11

The investor shall enjoy the following benefits:

First: The investor shall have the right to take out the capital he brought into Iraq

and its proceeds in accordance with the provisions of this law and pursuant to the

instructions of the Central Bank of Iraq in an exchangeable currency after paying

all his taxes and debts to the Iraqi Government and all other authorities.

Second: The foreign investor shall have the right to:

A. Exchange shares and bonds listed in the Iraqi Stock Exchange.

B. Form investment portfolios in shares and bonds.

Third: Renting or leasing lands needed for the project for the term of the

investment project, provided that it does not exceed 50 years renewable with the

agreement of the Commission, and provided that the nature of the project and its

benefit for the national economy is taken into consideration when determining the

period.

Fourth: Insuring the investment project with any foreign or national insurance

company it deems suitable.

Fifth: Opening accounts in Iraqi or foreign currency or both at a bank inside or

outside Iraq for the licensed project.

Article 12

This law shall guarantee the following for the investor:

First: Priority in recruitment and employment shall be given to Iraqi workers.

The right to employ and use non-Iraqi workers in case it is not possible to employ

an Iraqi with the required qualifications and capable of performing the same task

in accordance with guidelines issued by the Commission.

Second: Granting the foreign investor and non-Iraqis working in the investment

projects the right of residency in Iraq and facilitating his/her entry and exit to and

from Iraq.

Third: Non-seizure or nationalization of the investment project covered by the

provisions of this law in whole or in part, except for projects on which a final

judicial judgment was issued.

Fourth: Non-Iraqi technicians and administration employees working in any

project shall have the right to transfer their salaries and compensations outside

Iraq in accordance with the law after paying their dues and debts to the Iraqi

government and all other entities.

Article 13:

Any amendment to this Law shall not have any retroactive affect regarding the

guarantees, exemptions, and rights recognized by this Law.

Chapter Four

Investor Obligations

Article 14:

The investor shall observe the following:

First: To notify the National Commission for Investment (

inserted in handwriting

),

the Region or Governorate Commission in writing immediately after the

installation and equipping of the fixed assets for the purposes of the project and

the date of the beginning of commercial activity.

Second: To keep proper records audited by a certified accountant in Iraq in

accordance with the law.

Third: To provide an economic and technical feasibility study for the project and

any information, data or documents required by the Commission or other

competent authorities regarding the budget of the project and the progress made in

its execution.

Fourth: To keep records of the project’s duty-free imported materials in

accordance with the provisions of this Law and specifying the depreciation

periods of these materials.

Fifth: To protect the safety of the environment and to adhere to the valid quality

control systems in Iraq and international regulations accredited in this field, also

the laws related to security, health, public order and values of the Iraqi society.

Sixth: To adhere to the valid Iraqi laws regarding salaries, vacations, work hours

and conditions and others as a minimum.

Seventh: Commitment to the correspondence of the work progress schedule

submitted by the investor with reality provided that the time difference shall not

exceed six months, and that the National Commission for Investment shall set

forth punitive conditions in case of exceeding the six-month period and that the

Commission shall have the right to withdraw the license.

Eighth: To train and rehabilitate its Iraqi employees as well as raising their

efficiency, skill and capabilities. Priority in employment and recruitment shall be

given to the Iraqis.

Chapter Five

Exemptions

Article 15

First: The project that has obtained an investment license from the Commission

shall enjoy exemption from taxes and fees for a period of (10) ten years as of the

date of commencing commercial operations in accordance with the areas of

development defined by the Council of Ministers at the suggestion of the National

Commission for Investment based on the degree of economic development and

the nature of the investment project.

.

Second: The Council of Ministers shall have the right to propose draft laws to

extend or grant exemptions in addition to the exemptions stipulated in paragraph

(First) of this Article, or provide incentives, guarantees or other benefits to any

project or sector or region and for the years and percentages it deems appropriate

in accordance with the nature of the activity, its geographical location and its

contribution to manpower employment and its effect on driving the economic

development, and for considerations of national interest.

Third: The National Commission for Investment has the right to increase the

years of tax and fees exemption in a way directly proportional to the increase in

the Iraqi Investor share in the project to reach fifteen years if the Iraqi Investor

share in the project was more than 50%.

Article 16

If the project is moved during the granted period of the exemption from a development

area to another, the project shall receive, for the purposes of the exemption mentioned in

paragraph (First) of Article (15) during the remaining term, the treatment of the projects

in the development areas it is moving to, provided that the Commission is informed of

such move.

Article 17

The project that obtains an investment license shall also enjoy the following:

First:

Assets imported for the purposes of the investment project shall be exempted

from fees, provided that their entry to Iraq is made within (3) three years

from the date of granting the investment license.

Second:

The imported assets required for the expansion, development or

modernization of the project shall be exempted from fees in case they led to

an increase in the designed capacity, provided they are brought in within three

years from the date of notifying the Commission of the expansion or

development. Expansion, for the purposes of this law, shall mean adding

fixed capital assets aimed at increasing the designed capacity of the project in

commodities or services or materials by a percentage exceeding (15%) fifteen

percent. Development, for the purposes of this law, shall mean replacing

project machines with more developed ones, totally or partially or making a

development on the standing devices and equipments of the project by adding

new machines and devices or parts thereof with the aim of raising the

productive efficiency or improving and developing the quality of the products

and services.

Third: Spare parts imported for the purposes of the project shall be exempted

from fees if the value of these parts does not exceeded (20%) twenty percent of

the fixed assets value, provided that they are not be used for any other purpose.

Fourth: Hotels, tourist institutions, hospitals, health institutions, rehabilitation

centers and educational and scientific organizations projects shall be granted

additional exemptions from duties and taxes on their imports of furniture,

furnishings and requisites for renewing and updating purposes at least once every

four years, provided that these items are brought into Iraq or used in the project

within (3) three years from the date of the approval decision of the Commission

on the import lists and their quantities, and provided that these items are not used

for purposes other than the imported purposes.

Article 18

If it is found that the fixed assets exempted, in whole or in part, from taxes or fees were

sold in violation of the provisions of this law or were used in anything other than the

project or for purposes other than the authorized purposes, the investor must pay the

taxes, fees, and fines incurred pursuant to the law.

Chapter Six

Procedures for Granting Investment and

Project Establishment License

Article 19

First: The investor shall obtain the license in addition to obtaining the rest of the

licenses for the purpose of enjoying the privileges and exemptions provided by

the Commission.

Second: The Commission shall grant the license for investment or project

formation based on a request submitted by the investor according to conditions

facilitated and prepared by the Commission. The request submitted by the

investor shall include the following:

A. Filling a request form prepared by the Commission

B. Financial competency from an accredited bank

C. Projects performed by the investor inside or outside Iraq

D. Details of the project intended to invest in and its economic feasibility.

E. A timetable for completing the project.

Article 20

First: The Commission must issue the establishing license through establishing

one window in the region or the governorate not organized in a region that

includes authorized representatives of the ministries and relevant bodies. The

Commission shall grant project formation license and obtain approvals from the

entities in accordance with the law.

Second: The Commission must help the investor to obtain licenses by

approaching the competent authorities and exploring the opinions of the entities

concerning the issuance of the formation license. These entities must issue the

decision to reject, approve or request amendment within 15 days from the date of

being notified. The failure to reply from the entity from which the opinion is

solicited shall be deemed as an approval and in case of a rejection there must be

cause for it.

Third: In case of disagreement between the National Commission for Investment

decision and the other relevant entity regarding the granting of the license other

than the Region’s Commissions, the dispute shall be brought before the Prime

Minister for settlement.

Fourth: In case the request for registration is rejected, the requestor may file a

complaint to the Chairman of the region or the governorate Commission

concerned within (15) fifteen days after receiving notification of the rejection

decision. The Chairman of the Commission concerned shall take a decision

concerning the complaint in question within a period of seven days. The petitioner

may appeal the decision of the Chairman of the Commission concerned rejecting

his complaint to the authority to which the Commission concerned is connected to

within 15 days from the date the complaint’s rejection and its decision is deemed

final.

Chapter Seven

General Provisions

Article 21

The project capital subject to the provisions of this law shall be made up of the following:

First: Cash transferred to Iraq through financial banks and companies or any

other legal means with the aim of investing it for the purposes of this law.

Second: The in-kind assets and incorporeal rights imported to Iraq or purchased

from the local markets by the cash transferred into Iraq:

A. In-kind assets related to the project.

B. The machinery, tools, equipment, buildings, constructions, transportation

means, furniture and offices appliances required for establishing the

project.

C. The incorporeal rights that include patents, registered trade marks,

technical know-how, engineering services, administrative and marketing

services and the similar.

Third: Profits, proceeds and reserves resulting from the capital invested in Iraq in

the project if the capital of such a project was increased or was invested in another

project covered by the provisions of this law.

Article 22

The foreign investor shall enjoy additional privileges in accordance with international

agreements signed between Iraq and his country or multilateral international agreements

which Iraq has joined.

Article 23

If the project ownership is transferred during the granted period of the exemption, it shall

continue to enjoy granted exemption, facilities and guarantees until the end of that period,

provided that the new investor continue to work on the project in the same specialization

or in another, with the approval of the Commission. The new investor must take the place

of the former investor in the rights and obligations consequent to the provisions of this

law.

Article 24

First: The investor, with the approval of the Commission, may sell exempted fixed

assets or relinquish it to another investor benefiting from the provisions of this law,

provided that he uses them in his project.

Second: The investor, after informing the Commission, may sell the exempted

fixed assets to any person or other project not subject to the provisions of this law

after paying the outstanding fees and taxes.

Third: The investor, with the approval of the committee, may re-export the

exempted fixed assets.

Article 25

In the event two or more companies or enterprises merge, the new company or entity

resulting from the merger must set up separate accounts for each project before the

merger in order to register and apply exemptions and facilitations stipulated in this law

during the remaining period of the exemption.

Article 26

Any project approved in accordance with the provisions of the previous applicable laws

shall continue to benefit from all exemptions granted to it pursuant to that law and until

the expiration of the exemption period and under the same terms.

Article 27

Disputes arising between parties who are subject to the provisions of this law shall be

subject to the Iraqi law unless otherwise agreed, contrary to the cases that are subject to

the provisions of the Iraqi law exclusively or the jurisdiction of Iraqi courts.

1. Disputes arising from the work contract shall exclusively be subject to the

provisions of the Iraqi law and the jurisdiction of Iraqi courts. Non-Iraqi

laborer shall be exempted if the work contract stipulated otherwise.

2. If parties to a dispute are non-Iraqis and in disputes not arising from a

crime, the opponents may agree on the law to be applied, the competent

court or any other agreement to resolve their dispute.

3. If a dispute between the partners or between the owner of the project and

others in a project subject to the provisions of this law resulted in the

stoppage of work for a period exceeding three months, the Investment

Commission may withdraw the license and ask the owners of the project

to settle the dispute within a period not to exceed three months. If such

period elapsed without settling the dispute between the partners or

between the owner of the project and others, the commission may take

legal measures to liquidate the project and notify the owner of the project

or one of the partners of such action. The liquidation money shall be

deposited in one of the banks after paying the dues of the State or any

other dues after final judgment of their entitlement is rendered.

4. If one of the parties to a dispute is subject to the provisions of this law,

they may, at the time of signing the agreement, agree on a mechanism to

resolve disputes including arbitration pursuant to the Iraqi law or any other

internationally recognized entity.

5. Disputes arising between the Commission or any governmental entity and

any of those subject to the provisions of this law on matters not related to

violations of one of the provisions of this law shall be subject to Iraqi law

and courts on civil matters. As for commercial disputes, parties may resort

to arbitration provided that such an arrangement is stipulated in the

contract organizing the relationship between parties.

Article 28

In case the investor violates any of the provisions of this law, the Commission shall have

the right to warn the investor in writing to remove the violation within a specific period.

In case the investor does not remove the violation within the specified period, the

Commission shall summon the investor or who represents him to state his position and

grant him other respite to settle the issue. Upon repeating or not removing the violation,

the Commission shall have the right to withdraw the investor’s license it issued and order

stoppage of work on the project and retain the State’s right to deny the investor the

granted exemptions and privileges from the date of the violation and allow others to

retain their rights to demand compensation for the damage caused by this violation,

without breaching any punishments or other compensations stipulated in the applicable

laws.

Article 29

All areas of investments shall be subject to the provisions of this law except:

First: Investment in Oil and Gas extraction and production.

Second: Investment in banks and insurance companies sectors.