This article is published to illustrate comprehensive information about the importance of having a partner that serves as Employer of Record in Iraq to operate your business with ease and compliance.
Economy Status in Iraq
Business Opportunities In Iraq
For investors, Iraq is drawing attention thanks to the major investments in infrastructure development, strategic energy projects, and the significant reconstruction process which constitute remarkable opportunities. Furthermore, The government’s efforts to develop public service delivery and shift to digitalization, alongside substantial projects in different sectors, highlight its potential as one of the most important markets in the Middle East (Lloyds Bank Trade) (Foreign Policy Research Institute).
From another perspective, the complexity of labor regulations, different types of visas and work permits, and specific social security and income tax requirements are considered the most important challenges to company owners and HR professionals. Understanding these elements and the role of the employer of record in Iraq is critical for companies looking to extend their operations to the country for compliance and successful business operations.
Employer of Record in Iraq:
Employer of Record in Iraq (EOR) is a service that enables companies to hire and manage employees in a foreign country remotely without establishing a legal entity there. The Employer of Record (EOR) service providers manage contracting, payroll, compliance with all valid in-country laws, execute all statuary payments to the related government departments, and other administrative tasks.
In order to run your business remotely, employer of record in Iraq (EOR) is essential especially for foreign companies to legally work in the country. While, in case you have foreign employees so EOR provider must obtain work permits for them.
1. Iraqi Labor Regulations:
The primary legislation governing employment relationships in Iraq is the Iraqi Labor Law No. 37 of 2015. It covers various aspects, including employment contracts, working hours, wages, leave entitlements, termination procedures, employee benefits, and protection against unfair dismissal.
2. Types of Visas and Work Permits ( Iraqi Ministry of Foreign Affairs ):
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- Tourism Visa: Grants the holder entry into Iraq once within three months from the date of issue and allows a one-month stay. It is intended for visiting tourist and archaeological sites.
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- Visit Visa: Allows the holder to enter Iraq once within one month from the date of issue and stay for one month, primarily for religious events or visiting holy sites (Consular Department Circular 1/3/6/4664 dated 16/2/2011). This visa is also issued to political figures, businessmen, investors, and other individuals deemed beneficial to Iraq by ambassadors and officials, for a duration of 30 days (Consular Department Circular 6/3/12162 dated 26/3/2013). For tourist groups, applications should be submitted through a tourism company in the mission’s work area in coordination with an officially licensed tourism company in Iraq.
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- Ordinary Visa: Allows entry into Iraq once within three months from the date of issue and permits a stay of up to three months. The holder must report to the Residence Directorate within ten days of arrival to confirm their presence (Consular Department Circular 8/3/8/98609 dated 14/10/2009).
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- Required Documents for Issuing Work Permits for Private Sector Company Employees ( Ministry of Labor and Social Affairs ):
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- A formal request addressed to the Directorate of Employment and Loans / Foreigners Department, signed by the company director.
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- Identification documents of the company owner.
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- An authorization or official power of attorney for the company’s representative, including their mobile number.
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- Copies of the passports of the foreign workers to be recruited or employed, including their job titles and translated, certified experience certificates if available.
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- Official company documents.
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- Proof of Iraqi workers’ employment (subscription forms with the latest receipt and the number of employees).
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3. Social Security Calculations (The revised Labor and Social Security Law for Workers in Iraq No. 18 of 2023)
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- The social security contribution is paid on a monthly basis with a of 17% of the salary amount, where employees contribute 5% and employers’ contribution is 12%.
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- Employers must pay this contribution on a monthly basis to the Ministry of Labor – Social Security Authority (MoLSA) on behalf of their employees.
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4. Personal Income Tax Calculations (General Commission of Taxes)
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- Personal income tax in Iraq is progressive, and the rates depend on the income level. The tax rates are as follows:
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- Up to 250,000 IQD: 3%
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- 250,001 to 500,000 IQD: 5%
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- 500,001 to 1,000,000 IQD: 10%
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- Over 1,000,000 IQD: 15%
Do you have any questions about the Employer of record in Iraq?
As a business owner, managing your business operations in Iraq in compliance with such complex employment regulations can be challenging, Shull can help streamline your HR requirements while you focus on your core business, don’t hesitate to contact us, we can assist you navigate through the complexities of Iraqi labor regulations and help you manage your business with compliance. Contact us today to learn how we can support your operations as your employer of record in Iraq, providing tailored solutions to meet your specific needs.
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