Hiring an Employee in Iraq: What Employers Need to Know
For companies hiring an employee in Iraq, an EOR allows the employee to be employed through a local legal employer while the client avoids having to immediately establish its own employment and payroll infrastructure. The employment relationship is governed by the applicable labour legislation, including Iraqi Labour Law No. 37 of 2015.
Hiring Employees in Iraq by foreign companies
Yes. Hiring an employee in Iraq is possible for foreign companies, subject to applicable employment, tax, social-security and registration requirements. The employment of foreign workers is specifically regulated under Iraqi Labour Law No. 37 of 2015, including requirements concerning work authorization.
Employment Contracts
When hiring an employee in Iraq, the employment relationship should be properly documented in accordance with the applicable labour regulations. Federal employment contracts and their required contents are governed by Iraqi Labour Law No. 37 of 2015, particularly Articles 37 and 38.
Under an EOR arrangement, Shull Solutions signs the employment contract with the employee as the legal employer, while the client defines the employee’s position, responsibilities, compensation and day-to-day requirements.
Payroll, Tax and Social Security
Payroll is one of the most important considerations when hiring an employee in Iraq. Shull Solutions manages salary calculations and applicable statutory deductions in accordance with the relevant tax and social-security legislation, including the Income Tax Law No. 113 of 1982, as amended, and the Retirement and Social Security Law for Workers No. 18 of 2023.
Social Security
Under Federal Iraq’s current social-security framework, the standard contribution is generally:
| Contribution | |
|---|---|
| Employee | 5% |
| Employer | 12% |
| Total | 17% |
These obligations arise under the Retirement and Social Security Law for Workers No. 18 of 2023. The applicable employer contribution can be higher for employers classified as “prime.”
Personal Income Tax
For Federal Iraq, employment income is subject to progressive personal income-tax rates ranging from 3% to 15%, depending on taxable income and applicable allowances and deductions, under Income Tax Law No. 113 of 1982, as amended.
The Kurdistan Region applies its own tax administration framework. The KRG currently states that 5% of net salary income is deducted from public- and private-sector employees earning more than IQD 1 million. This is administered under the applicable Kurdistan Region income-tax framework.
Hiring Local or Foreign Employee in Iraq
Hiring an employee in Iraq involves different considerations depending on whether the employee is an Iraqi national or a foreign national. For foreign employees, work authorization and related requirements are governed principally by Iraqi Labour Law No. 37 of 2015, together with the applicable immigration and residency regulations.
Termination and Final Settlement
When hiring an employee in Iraq, employers should also understand the requirements that apply when employment ends. Termination, notice and related employment rights are regulated under Iraqi Labour Law No. 37 of 2015.
Under an EOR arrangement, Shull Solutions manages the formal employer-side termination process, including applicable notice requirements, documentation, final salary and statutory entitlements.
Why Use Shull Solutions?
For companies hiring an employee in Iraq, establishing a local employment structure can involve multiple administrative responsibilities. Shull Solutions combines Employer of Record, payroll, recruitment and HR administration while managing the applicable requirements under Iraqi Labour Law No. 37 of 2015, Income Tax Law No. 113 of 1982, and Retirement and Social Security Law No. 18 of 2023, as applicable to the employee and jurisdiction.
Hiring an Employee in Iraq With Shull Solutions
Whether you are hiring an employee in Iraq for the first time or managing an established workforce, Shull Solutions can help you understand the applicable employment, payroll and compliance requirements in Federal Iraq and the Kurdistan Region.
Contact Shull Solutions to discuss your specific requirements and get practical guidance on employing staff in Iraq or the Kurdistan Region.
Legal & Regulatory Disclaimer
The information provided in this article is for general informational purposes and does not constitute legal or tax advice. Employment, taxation, social-security and immigration requirements may differ between Federal Iraq and the Kurdistan Region and may change over time. Specific requirements should be assessed according to the circumstances of each employee and employer.