Exemptions & Obligations
Section I: Tax & Customs Exemptions
1. A project shall be exempt from all non-custom taxes and duties for 10 years starting from the date of providing services by the project, or the date of actual production.
2. Equipment and machinery that are imported for the project shall be exempt from taxes, duties and the condition to obtain an Import License, provided that they cross the region’s borders within two years from the approval of their lists by the Chairman of the Board, and that they are used exclusively for the purposes of the project, failing which the exemptions will not apply to them and the Investor will be compelled to pay tax and will be penalized with a fine which is twice as much as the amount of tax due.
3. Spare parts that are imported for the project shall be exempt from taxes and duties, provided that their value does not exceed 15% of the price of equipment and machinery, and with the prior approval of their lists and quantities by the Chairman of the Board.
4. Equipment, machines and tools needed to expand, develop or upgrade/modernize the project shall be exempt from taxes and duties.
5. Raw materials imported for production shall be exempt from customs duties for 5 years, provided that the types and quantities of such materials are specified by the Board, with the priority given to using the locally available raw materials which are suitable in quality and quantity for the investment project.
6. An Investor may, under the provisions of this Law, import all his Project’s needs, including the equipment and machinery. Such imports shall be exempt from all customs duties as they cross the region’s borders, provided that they are used exclusively for the project’s purposes.
Section II: Additional Exemptions
1. In accordance with the public interest of the Region, the Board may give additional facilities and incentives to investment Projects licensed under this Law to which either of the following features applies, and in compliance with controls and regulations set by the Board for this purpose:
i. Projects set up in under-developed areas in the region.
ii. Joint Ventures set up by national and foreign Investors
2. Depending on the nature of Service Projects which are set up under the provisions of this Law, and in particular Projects of hotels, hospitals, tourist resorts, universities and schools, the Board may offer additional exemptions from charges and duties on their purchases of furniture and supplies for upgrading and modernization once every 3 years, provided that these should enter into the Region and be used solely for the Project within one year from the date of approval of the purchase lists and quantities by the Chairman of the Board.
Section III: Legal Guarantees
1. An Investor may obtain insurance cover for his investment Project from any foreign or national insurance company that he sees fit, such that all aspects of operations that he carries out will be insured.
2. An Investor may employ local and foreign staff needed for the Project, with the priority given to recruiting local manpower in accordance with the laws and regulations applicable in the Region.
3. A foreign Investor shall be entitled to transfer the profits and interests of his capital abroad, in accordance with the provisions of this Law.
4. The Project’s non-Iraqi members of staff, and their agents outside the Region, shall be entitled to transfer their dues and wages abroad in accordance with the applicable laws.
5. A foreign Investor shall be entitled to send his capital back abroad upon winding up or disposal of the Project, without prejudice to applicable laws and regulations regarding taxes and customs.
6. An Investor may transfer his investment totally or partly to another foreign Investor or to a national Investor, or may assign the Project to his partner with the approval of the Board. The new Investor then replaces the previous Investor with regard to rights and obligations arising from the Project.
7. An Investor may, for his Project which is licensed under this Law, open bank accounts in national currency, in foreign currency, or in both, with banks located inside or outside the Region.
8. Without prejudice to applicable laws regarding the boards of directors of joint-stock companies, the Projects registered under this Law shall be deemed as private sector Projects, regardless of the legal form and nature of their shareholding funds.
9. An Investor may under this Law maintain confidentiality of technical and economic know-how of the Project, and may uphold the investment initiatives in accordance with the provisions of laws, regulations and directives applicable in the Region. Any person will be punished by law if he discloses any information in his possession by virtue of his post, or information related with the investment initiative and with technical, economic or financial aspects of the Project.
Section IV: Investor’s Obligations
An Investor shall comply with the following:
1. To specify the area of his investment regarding the Projects implemented by him, and to reveal his financial statements/balance sheets and the contracts that he implemented.
2. To inform the Board about the completion of the Project, and when it starts in providing services or in actual production.
3. To provide the facilities needed by the Board’s personnel enabling them to collect and acquire the necessary information about various aspects of the Project, for the purposes of the Board.
4. To keep special records of the Project’s imported materials which are exempt from customs duties under the provisions of this Law.
5. To safeguard the environment, maintain public health and safety, and comply with standardization and quality control systems, in accordance with international standards.
6. To offer training and qualification to the Project’s local members of staff.
Section V: Legal Procedures upon Investor’s Contravention
1. Upon the Investor’s contravention of the provisions of this Law, or contravention of any clause in the contract between the Investor and the Competent Authorities, the Board shall send a notice to the contravener requesting immediate halt of the activity causing the contravention and giving him an appropriate period of time, determined by the Board and commensurate with the nature of the contravention, to remove the contravention and its effects.
2. If the Investor carries on without removing the contravention and its effects as per the provisions of paragraph (1) above, the plot of land shall be recovered from him, and the Board shall take possession of the installations (if any) built on it by the Investor in due demolish value in accordance with the law. The new Investor, to whom the plot of land will be allocated to complete the Project under this Law, will be responsible for paying the demolish value, and the contravener shall be responsible for any damage arising from his failure in carrying out his obligations.
3. If the Investor grants, without the Board’s approval, a full or partial sublease of the plot of land allocated for his Project, or if the Investor, without the Board’s approval, exploits the plot of land for purposes other than those for which it was allocated, the Board shall recover from him the plot of land or the part thereof subleased or exploited for the improper purposes, and the Investor shall pay twice the amount for the period of the land sublease or its exploitation for improper purposes. This amount shall be collected in accordance with the Law of Government Debt Collection applicable in the Region. In the event of recovery of the whole plot of land, the contravening Investor will be treated in accordance with the provisions of paragraph (2) above with regard to the installations built on it at the time of recover.