Can an unregistered foreign company operate or open an office in Iraq?
A foreign company signs a contract with an Iraqi body, sends staff to follow a project, or rents an office in Baghdad "for now". In each case the Law Office of Ali Barakat, in Baghdad, al-Yarmouk, asks the same question: has the company crossed the line that requires a registered branch? The answer lies in article 14 of Foreign Company Branches Regulation No. 2 of 2017 and its two amendments.
The rule: no business and no premises without a licence
Until a registration licence is issued, article 14(1) bars a foreign company from two things: doing any business in Iraq, and opening premises there. The ban is not limited to buying and selling; having the office at all is covered. Article 14(2) gave foreign branches and offices already in Iraq when the regulation took effect, registered or not, one year to put their position in order.
When is a company "doing business"?
Since article 6 was rewritten by Regulation No. 4 of 2023, a branch counts as active in four situations: it actually begins work under a contract with a government department or a state-owned or mixed company; it signs an investment contract; it obtains a work licence from an Iraqi body that can grant one; or it deals with the private sector under a contract or project worth one million US dollars or more. These situations were written to define activity by a registered branch, but they give a practical measure of what the regulation treats as real business in Iraq.
The exception: supply contracts
Regulation No. 1 of 2025 added article 14(3). A foreign supplier whose contract is limited to delivering goods or a service now sits outside the ban, so long as the contract does not commit it to work performed on Iraqi soil for twelve months or more. The test works both ways:
- A supplier that sells and delivers, even to a government body, with no commitment to in-country services for a year or more: outside the ban.
- A contract combining supply with installation, maintenance, operation or training in Iraq for a year or more: back inside the ban, and a branch is required.
So it is the length of the services in the contract, not its title, that decides.
Who keeps watch?
Article 13 requires a foreign company to report to the registrar, on the prescribed form, when it starts any business in Iraq, and requires government bodies and the public and mixed sectors to report any business they do with foreign company branches. The Iraqi contracting party is itself a source of information for the registrar.
The penalty
Law No. 17 of 2019 rewrote article 215 of Companies Law No. 21 of 1997. Its second paragraph now applies to anyone operating under the name of a foreign branch that has no licence the same penalty as for trading in the name of an Iraqi company before its certificate of incorporation: imprisonment, a fine, or both, within the limits the text sets. On top of that, article 15 of the regulation, as worded since 2023, subjects branches to the Companies Law's penalties and provisions unless they conflict with the regulation.
The Council of Ministers, on the minister's proposal, may exempt foreign companies from the regulation, under article 15(2). An exemption is possible, but it is a decision that has to be issued, not an assumption.
Lawful alternatives
A foreign company wanting a presence in Iraq without registering a branch can look at other structures, such as forming an Iraqi company with an Iraqi partner holding at least fifty-one per cent, or working through a commercial agent. Comparisons are in Branch, subsidiary or representative office and Branch or limited company. Tax withholding from foreign contractors is covered in Withholding from foreign contractors.
The office follows these provisions from Baghdad, al-Yarmouk.
Legal basis and sources
- Foreign Company Branches Regulation No. 2 of 2017, articles 6, 13, 14 and 15 (Iraqi Official Gazette, issue 4438 of 13/3/2017)
- Regulation No. 4 of 2023 (Iraqi Official Gazette, issue 4734 of 28/8/2023)
- Regulation No. 1 of 2025 (Iraqi Official Gazette, issue 4810 of 13/1/2025)
- First Amendment to the Companies Law, Law No. 17 of 2019, article 10 replacing article 215 (Iraqi Official Gazette, issue 4554 of 9/9/2019)
Frequently asked questions
Can a foreign company rent an office in Baghdad before registering a branch?
Article 14(1) bars a foreign company from opening premises in Iraq before it holds a registration licence.
We supplied equipment to a ministry and will provide six months of maintenance. Do we need a branch?
The article 14(3) exception covers supply contracts unless they include services inside Iraq for at least a year, so the period written into the contract decides it.
What is the penalty for operating as an unregistered branch?
Article 215(2) of the Companies Law, as amended in 2019, applies the penalty for trading before incorporation: imprisonment, a fine, or both.
Do government bodies know whether a company is registered?
Article 13 requires government bodies and the public and mixed sectors to report to the registrar any business they do with foreign company branches.
Related topics and articles
- 01What did the 2023 and 2025 amendments change in Iraq's Foreign Company Branches Regulation?The first amendment to Foreign Company Branches Regulation No. 2 of 2017, by Regulation No. 4 of 2023, and the second, by Regulation No. 1 of 2025: who counts as a foreign company, one year instead of two, the registrar's deadline and deemed approval, the legal adviser, when a branch is active, and the supply-contract exception.
- 02A branch, a subsidiary and a representative office, and what may differ in the RegionA foreign-company branch, an Iraqi subsidiary, and a so-called representative office, with a general note on the Region, under the 2017 regulation.
- 03When is a branch chosen, and when is an Iraqi limited company chosen?Opening a foreign-company branch or forming an Iraqi limited company at the Registrar, under the 2017 regulation and Companies Law 21/1997, as amended.
- 04Withholding from amounts due to a foreign contractor or companyWithholding from a foreign contractor or company is read from the Income Tax Law and official instructions, not the assessment page.
- 05Closing a foreign-company branch: liquidation and strike-offClosing a foreign-company branch in Iraq: strike-off by the Registrar, or liquidation on the company's request, under Regulation No. 2 of 2017 as amended.