Business in Erbil

Erbil (Arbil, Hawler) has been a melting pot since time immemorial. Today, several different nationalities live and work together in harmony here. The composition and style of the local working population reflects this. They are multilingual, multicultural, tolerant, consensus-oriented, and politically and culturally neutral. The Erbil metropolitan Area stands out from the crowd as a centre of international trade. The region combines transport and logistics expertise with an in-depth knowledge of all the relevant middle-East and European markets.

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Start business in Erbil

Saturday, 22 May 2010

Whether you're a brand new business or expanding into a new area, success depends on good preparation and choosing the right tax structure. This is also the case when you are starting a business in Erbil.

In contrast to other countries within the middle-east zone, there are no special conditions or restrictions for non-Iraqi businesses and individuals when it comes to setting up a new enterprise. The entrepreneur can decide whether to make the enterprise a separate legal tax entity or not.

As in most other countries, setting up a new company in Iraqi Kurdistan requires a series of permits. These vary according to the type of initiative. But in any case you should plan for the following:
The law requires that an employer who hires a non-Iraqi employee must apply for a permit. If, as a non-Iraqi company with a new business or subsidiary in Erbil you will bring expat employees here to work, you must first submit applications for them (and their family members).

With any production site, under Iraq law you must first conduct a study into any possible environmental impact. When a neutral impact is predicted, an environmental exemption permit is issued. For all new buildings, a building permit is required. Here too there’s a mandatory environmental test.
In principle, an entrepreneur in Kurdistan needs no permit to do business. But for more complex business activities and activities where there is a chance of environmental or social damage, a permit to do business is required.

Under Iraq law, the founder of a start-up company must check whether the company name (or similar) already exists in Iraq. In practice, this audit is done by the notary who sets up the company, or by the local chamber of commerce where the company is registered.

 

Foreign companies wishing to register a branch in the Kurdistan Region

Most of the procedures outlined below can be undertaken by a local lawyer and accountant. The following documents and forms can be provided in either English, Kurdish or Arabic:

  1. Certified copy of company's registered name.
  2. Company registration certificate, authorised by the company's country of origin, and certified by the nearest Iraqi embassy or official KRG representation abroad.
  3. Letter from the main company, on company letterhead, authorising the opening of a branch office in Kurdistan. This letter should identify the branch office's lawyer and accountant (both must be Iraqi), and the authorised branch manager (can be any nationality). At least three residents of the Kurdistan Region as company employees and their positions stated. This letter should also be certified by the nearest Iraqi embassy or an official KRG representation abroad.
  4. Deposit of funds (exact amount depends on the type of company) to be held in escrow by the Kurdistan Regional Government during the period the company operates in the Kurdistan Region. The funds will be returned when the company leaves the Region.
  5. A copy of the main company's financial statements covering the previous year.
  6. A branch registration fee of 200,000 Iraqi Dinars (approximately 175 US Dollar).
  7. Certified rental contract for the branch premises in the Kurdistan Region.
  8. Certified copies of work contracts (if any) that the company has signed in the Kurdistan Region.
  9. The completion of the Foreign Branch or Trade Office Registration Form at http://www.briraq. com/English/formsandinstructs.htm (please note the website is currently unavailable), to reserve and register the branch office.
  10. Certified copies of the passports of foreign partners/employees, and ID cards of Iraqi employees.
  11. Letter from an Iraqi lawyer affirming the validity and legality of all the above documents.
  12. The KRG Ministry of Trade General (Company Registration Directorate) is responsible for company and branch registration.

 

Requirements for opening a new company (not a branch office)

  1. Minutes must be taken of an inaugural Board meeting held at the companies registered office in Kurdistan. A Managing Director and all members of the board must be appointed and minutes are signed by all shareholders (or their nominee).
  2. Each shareholder needs to provide two passport photographs and a copy of his/her passport.
  3. A Foundation Contract to be prepared by a lawyer registered in Kurdistan. This is compulsory. A local lawyer must subsequently be retained by the company.
  4. Company name has to be registered at the relevant Chamber of Commerce in either Erbil, Dohuk or Suleimaniah.
  5. Accounts have to be prepared and signed off by a local accountant who must be a member of the local Syndicate of Accountants.

 

 

To find a local lawyer please contact the Kurdistan Lawyers Syndicate:

Approximate costs of establishing an office in Erbil (as of January 2007)

  • Company registration fee: $370
  • Legal/Solicitor fees: $2,000 - 5,000 depending on size of company
  • Monthly legal retainer: $ 500
  • Accountants fees (set-up): $1,000
  • Monthly accounts thereafter: $200
  • Office* $2,500 – $3,500 per month
  • Car & Driver $1,000 per month
  • Guards** $400 per guard per month
  • Generator purchase cost $7,000
  • Diesel and maintenance $300 per month

 

* Office space and housing are the same. There is still a great shortage in designated office space so it is normal to rent a house and turn it into an office with accommodation.
** Depending on the size of the company and the number of staff, it is advisable to employ four Guards to work in shifts (two on and two off).

An Office manager would expect a wage in the region of $1,000 - $1.500 per month. If required a secretary/translator would earn approx $700 - 1.000 per month according to age and experience. It is expected to provide lunch and other meals if necessary for staff, a food bill for two people would come to approximately $150 - $200 per month.