Free Zones Authority Law No. 3 of 1998
The Law Office of Ali Barakat in Baghdad sets out what Free Zones Authority Law No. 3 of 1998 provides. The law was published in the Official Gazette, issue 3722 of 18/5/1998, and enters into force on the date of its publication, under article 10. The law creates a public authority with legal personality linked to the Minister of Finance, places its management in a board chaired by the Director General with representatives of ministries and economic bodies, and gives that board the power to propose the creation and abolition of free zones, decide investment applications inside them, and set service charges and rents for their facilities. It is a self-standing path, separate from the investment licence granted by the investment commissions under Investment Law No. 13 of 2006, as amended.
Establishment of the Authority and its objects
Article 1 establishes an authority for the management and investment of free zones in Iraq, named the General Commission of Free Zones (الهيئة العامة للمناطق الحرة), linked to the Minister of Finance and represented by its Director General or a person the Director General authorises. It has legal personality and financial and administrative independence, and is self-funded. Its seat is in Baghdad, and it may open branches inside Iraq.
The Authority’s objects, under article 2, are to manage and invest free zones as an Iraqi investment in the service of the national economy; to establish and develop the stores, installations and warehouses needed for the free zones; and to apply the conditions and rules of customs control. The statement of motives speaks of attracting capital, introducing technology, creating work and increasing exports, and of managing free zones as an Iraqi investment. Those motives explain the purpose of the statute. They do not add a power that is not in the articles.
The Authority is administered by a board, under article 3, chaired by the Director General, with a representative of each of the Ministry of Trade, the Ministry of Industry and Minerals, the Ministry of Oil, the Ministry of Transport and Communications, the Central Bank of Iraq and the General Commission of Customs as members, together with two persons of experience and specialisation named by the Minister of Finance, and one of the Authority’s staff as secretary of the board. The Authority is managed by a Director General who holds at least a first university degree and has experience and specialisation in its field of work, and who implements the board’s decisions and recommendations, prepares the draft budget, and carries out the work needed to run the Authority within the powers the board grants, under article 5.
Powers of the board under the statute
Article 4, first, provides that the board: lays down the Authority’s general policy; proposes the creation and abolition of free zones; prepares plans and programmes for their development; decides investment applications in the free zones for industrial, commercial and service projects; fixes the fees and service charges in the free zones and the rents and consideration for use of their facilities; determines the arrangements for insurance in the free zones; proposes draft loan contracts and agreements; approves the Authority’s annual budget; proposes draft laws, regulations, instructions and decisions on the exemptions granted to investment projects in the free zones; proposes an incentives scheme for the Authority’s staff; and may delegate some of its powers to the Director General. The board meets at least once a month. A quorum is a majority of the members, and decisions are taken by a majority of those present, the side for which the chair voted prevailing in the event of a tie. Decisions of the board on the matters in items 1, 2, 3, 7, 8, 9 and 10 of paragraph first are subject to the Minister’s ratification; other decisions of the board are laid before the Minister for information only. That ratification rule sits in paragraph third of article 4. Paragraph second deals only with the board’s meetings, quorum and voting.
The creation or abolition of a free zone is therefore a proposal of the board, subject to the Minister’s ratification in this arrangement. Deciding an investment application inside a free zone is a power of the board. Fixing fees, charges and rents is also a power of the board. The text delegates setting fees, charges, and rents directly to the board.
The Authority’s resources consist of rents and temporary occupation charges for land and property it owns, service charges, and any other resources the Minister approves, under article 6. The service rules applicable to staff of the General Commission of Customs apply to the Authority’s staff, under article 7. The Authority applies the unified accounting system, and its activities are subject to the audit of the Board of Supreme Audit, under article 8. Regulations may be issued to facilitate the implementation of this law, and the Minister may issue instructions for that purpose, under article 9.
This law does not, in its articles, fix a period for deciding an investment application inside a free zone, and it does not name a court for a challenge. An investment licence under Law 13 of 2006 is a separate path: it is sought from the National Investment Commission, a governorate commission or the Region’s commission, through the one-stop window and within the periods in that law, as set out on the page How is an investment licence applied for?. A project in a free zone is read in Law 3 of 1998 and in any regulation or instructions issued to facilitate its implementation. It is not reduced to a licence under Law 13 alone, and the converse is also true.
Legal basis and sources
- Free Zones Authority Law No. 3 of 1998 (Official Gazette No. 3722 of 18/5/1998)
- Investment Law No. 13 of 2006 as amended
Frequently asked questions
To whom is the Free Zones Authority linked?
To the Minister of Finance. Its seat is in Baghdad, and it may open branches inside Iraq, under article 1.
Who decides an investment application inside a free zone?
The Authority’s board, under article 4, first (4), in respect of industrial, commercial and service projects.
Does an investment licence under the Investment Law replace this law?
No. Law 3 of 1998 governs the management of free zones and the decision of applications inside them. Law 13 of 2006 governs an investment licence before the investment commissions. Each path is read in its own text.
Related topics and articles
- 01How is an investment licence applied for, and who grants it?Applying for an investment licence under Law 13/2006 as amended: application, one-stop window, 45-day decision, sectoral reply in 15 days, grievance.
- 02When to approach the Baghdad Investment Commission, and when the National Investment Commission?When to apply to the Baghdad or National Investment Commission under Law 13/2006 as amended: strategic and federal projects, and Cabinet approval.
- 03Industrial investment land in Basrah under the Investment LawHow Law 13/2006 as amended treats title or musataha of industrial land for a project in Basrah, without listing unconfirmed plots.
- 04The Kurdistan Board of Investment and an investment licence in the RegionInvestment Law 13/2006 on the Region’s commission and a Kurdistan licence, with no regional law number cited without a published official instrument.
- 05The legal framework for setting up a factory or industrial project in IraqTwo routes to a private or mixed industrial project in Iraq: a formation licence from the General Directorate of Industrial Development under Industrial Investment Law No. 20 of 1998, or an investment licence under Investment Law No. 13 of 2006. Who may use each, what each offers, and what the project owner must do.