investment in kurdistan

8/3/2019 Investment in Kurdistan

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Investment inKurdistan

Prepared by : MohamedSalah

MohamedEzz

Ahmed SamyMohamed

MoustafaMohamed


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Location & Population

Investment Law & Taxation Policy

Legal Guarantees

Current Situation

Content:


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Location & PopulationCapital: Arbil

Official Language: Arabic,Kurdish

Government: Parliamentary Democracy

President: Massoud Barazani

Prime Minister: Barham Salih

Area: 40,643 km2

Population: 4,864,000

Currency: Iraqi Dinar


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Why do we invest in Kurdistan?

Kurdistan Regional Investment Law

Full repatriation of project investment andprofits allowed. Project income tax exempt forten years from date production commences oroffers of services; no provision for extensionof income tax exemption

Employment of foreign workers allowed,

provided no capable Iraqis available; foreignworkers ma re atriate earnin s.

Investment Law &

Taxation Policy


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KRG will provide services (water,electricity, sewage, public road,

telecommunications, etc.) to theboundary of the project.

Import of raw materials for production taxexempt for customs duties for five years

The Investment Law of Iraqi KurdistanRegion treats foreign and local investorsequally. The foreign investor has the rightto invest for himself without a partner or

choose a partner as he likes.

Foreign investors have the right totransfer all his gains to his originalcountry or to any other countries he likes.


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The foreign investor is entitled to investin the region and his capital is treated likethe national investor's capital. The

foreign investor has the right to reducethe entire capital held by any project inthe region.

Foreign investors may establish

completely foreign owned entitiesincluding subsidiaries. They may enterinto joint venture agreements withdomestic investors, acquire an existing

investment or open branch offices.


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Amendments to Tax Laws inKurdistan Region

April 04 2008

On January 1 2008 Kurdistan regionalgovernment Law 26/2007 came into effect.The law amends the Kurdistan regional

governments implementation of Iraqi Income

Tax Law 113/1982. The changes in theimplementation of the Income Tax Law help tobring the corporate income tax structure ofthe Kurdistan region more into line with thatof federal Iraq and are part of a series of taxreforms in the region designed to promote


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Law 26/2007 repeals Law 5/1999 and inturn institutes a more favorable flat taxrate of 15% on all kinds of compan[y]operating in the Kurdistan [r]egion. Thisnew tax rate, which is in line with that ofthe rest of the country, will be moreenticing to investors and should help to

reduce the burdens of investing in bothfederal Iraq and the Kurdistan region.

Although the rate of corporate incometax is currently set at 15% in both federalIraq and the Kurdistan region, there arestill differences between the tax laws ofthe Kurdistan regional government andthe Iraqi federal government.Furthermore, in the Kurdistan region


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Legal GuaranteesWhat are the investment guarantees inKurdistan?

An investor may obtain insurance cover forhis investment project from any foreign ornational insurance company that he sees fit,

as such all aspects of operations that hecarries out will be insured.

An investor may employ local and foreignstaff needed for the project, with the priority

being given to local manpower in accordance


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Foreign members, staff or agents of the

projects are entitled to transfer their duesand wages abroad in accordance with theapplicable laws.

Foreign investors are entitled to send

back their incomes abroad uponcompleting projects with abiding byapplicable laws and regulations regardingtaxes and customs.

An investor may transfer his investmenttotally or partially to another foreigninvestor, or may assign the project to hispartner with the approval of the Board.

The new investor then replaces the


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An investor can open bank accounts forhis project licensed under this law innational or foreign currency or in bothirrespective of whether the bank is

located inside or outside the region.

Without prejudice to applicable lawsregarding the boards of directors of joint-stock companies, the projects registered

under this Law shall be deemed asprivate sector projects, regardless of thelegal form and nature of their shareholderfunds.


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An investor may under this Law maintainconfidentiality technical and economicknow-how of the project, and may uphold

the investment initiatives in accordancewith the previous of laws, regulations anddirectives applicable in the region. Lawwill punish.

Any person if he discloses anyinformation related with the investmentinitiative and with technical, economic orfinancial aspects of the project.


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Current SituationKurdistan's economy is expanding even fasterthan Iraq's overall annual growth rate of 7.3%

GDP (purchasing power parity):

$113.4 billion (2010 est.)

country comparison to the world: 66

$112.4 billion (2009 est.)

$107.9 billion (2008 est.)

note: data are in 2010 US dollars
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=66https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=66https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html


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GDP- per capita (PPP):

$3,800 (2010 est.)


$3,900 (2009 est.)

$3,800 (2008 est.)

note: data are in 2010 US dollars

GDP - composition by sector:

agriculture: 9.7%

industry: 60.5%
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=159https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=159https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html


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Inflationrate (consumer prices):

2.4% (2010 est.)


-2.8% (2009 est.)

Market value of publicly traded shares:

$2.6 billion (31 July 2010)


$2 billion (31 July 2009)

$1.878 billion (31 March 2008)
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=77https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2200rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=94https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2200rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=94https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html?countryName=Iraq&countryCode=iz&regionCode=mde&rank=77https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html


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Key Economic

StatisticsGDP: $131B USD

Per Capita Income: $4,360 USD

Workforce: Amm7,740,000an

Consumer Price Inflation: 6.8%

The average salary for kurdistanjobs is$52,000. Average kurdistan salaries can varygreatly due to company, location, industry,experience and benefits.

This salar was calculated usin the avera e
http://www.simplyhired.com/a/jobs/list/q-kurdistanhttp://www.simplyhired.com/a/jobs/list/q-kurdistanhttp://www.simplyhired.com/a/jobs/list/q-kurdistanhttp://www.simplyhired.com/a/jobs/list/q-kurdistan


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National Income

The past years experienced a large growth innational income rates and average per capitashare thereof. As a result, local production was

more diversified in favor of the economicsectors.

National income achieved a qualitative boomupwards from ID 4,373,887.262 million in2003 to ID 17,017,138.822 million in 2007, atan increase rate of 289%.

In 2008, it registered another rise reaching ID

35,665,500 million at current prices at an


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The increase of national income values during the past years reflected clearly on average percapita share thereof. It rose from ID 976,794 in 2003 to ID 1,728,935 in 2004, at an increaserate of 77%. This increase rate continued as a result of the rising state budget, reaching toabout ID 3,372,433 in 2007, and ID 6,858,750 in 2008, at an increase rate of 103.4%,compared to 2007, and 602.2%, compared to 2003. It had a compound growth rate of 42.7%

for 2003-2008 at current prices.

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Growth of National Income and Per Capita Share at Current Prices 2003-2008


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an er ap aGDP

Economic development figures for 2004-2008 reveals that GDP at current prices increasedfrom ID 2,419.6 billion in 2004 to ID 9,947.2 billion in 2007. Later, it rose to ID 24,725.7billion in 2008 at current prices, at a total increase rate of 1022% and a compound growthrate of 68.9% for 2004-2008, reflecting remarkably on per capita GDP which increased fromID 524,426 in 2004 up to ID 1,976,673 in 2007, and ID 4,754,942 in 2008.

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Growth of GDP and Per Capita GDP at Current Prices 2004-2008


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GDP at Current Prices by

Economic ActivityEconomic sectors contribution to GDP

generation revealed different rates, coupledwith sustained growth rates due to the stable

local and foreign political and economiccircumstances experienced by Kurdistanseconomy over the past years. Table (4)reveals that sectors' contribution rates in

2007 were as follows: transportation,telecommunications, and storage (57%);social and personal development services(22.7%); wholesale and retail (8%); tourism

and hotels services (7%); GFSY (5.6%);


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The transportation, telecommunicationsand storage sector contribution to GDProse from ID 726.1 billion at currentprices in 2004 to ID 5,211.8 billion in2006, with an increase rate of 617.7%,rising to ID 5,672.2 billion in 2007, withan increase rate of 8.8% from 2006 and

681.2%, from 2004.

GFSY's contribution value reached ID353.9 billion in 2004, which rose to ID514.3 billion in 2006, at an increase rateof 45.3%, followed by another rise of upto ID 560.5 billion in 2007, at an increaserate of 8.98% from 2006, and 58.4% from2004.

Wholesale and retail sector contribution


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Manufacturing industries sector

contribution rose from ID 50.8 billion in2004 up to ID 97.6 billion in 2006, at anincrease rate of 92.1%. It registeredfurther increase of up to ID 108.5 billion

in 2007, at an increase rate of 11.2%from 2006, and 113.6% from 2004.

Building and construction sectorregistered a remarkable contribution,

reaching ID 46.8 billion in 2004, whichrose up again to ID 355 billion in 2006,then to ID 388.6 billion in 2007, with anincrease rate of up to 9.5%, compared to

2006, and 730.3% from 2004.


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GDP by Economic Sectorat Current Prices 2003-2007 (ID billion)

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FCF

FCF refers to the material constituent arisingfrom the investment process.

It is mainly represented by the existing assetsof machines, equipment, buildings, structures,transportation vehicles, in addition to otherstationary elements, involved in theproduction process.

FCF stages have a strategic importance notonly at the level of long-run economicchanges, but also at the short-lived changes

and their impact on overall economic activity.


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Investment

After 2003, the Region succeeded to attractboth foreign and local (private) investors dueto the promising and diverse investment

opportunities thanks to the political andsecurity stability achieved through thegovernment's sustainable efforts in thisregard, culminating in the enactment of

Investment Law No. 4 of 2006. This law marksa substantial change towards enhancementand attraction of foreign and localinvestments, and creation of new investment

opportunities.


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Total Invested Money by governorate at the End of 2009 (US$ million)


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The demands for investments expansion

and increasing its contribution to thedevelopment processes require activationof BOI activities, particularly in the field ofdrawing the Region's investment map,

and promotion of available annualinvestment opportunities through mediasources, Commissions website, and thegovernments official website.

These demands also require cooperationwith the stakeholders for advertising theexisting opportunities and ensuringoptimal attraction of foreign and local

investors towards an effective


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Consumption

ExpenditureHistorical sources confirm that overall

government and private consumptionexpenditure developed during the past years,

reaching ID 19.721 trillion at current prices.Private consumption expenditure (real estateownership) came to ID 14.505 trillion of finalconsumption expenditure. Private

consumption expenditure rate to GDP reached82% and to imports 18%. On the other hand,government consumption expenditurereached ID 5.216 trillion, accounting for 36%

of total final consumption expenditure. No


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Total Consumption Expenditure at Current Prices, 2008


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Goal-Achievement

IndicatorsNational income increase by 7% in five years,

coupled with an 8% GDP increase.

Increased number of licensed businesses in allfields by 15% annually.

Heightened competitiveness of the Region's,aimed to create new economic projects, based

on reduced construction costs and minimizedproject execution time, ensuring that theseindicators will be less than the correspondingfigures of Iraq by 2012 and of the neighboring

countries by 2016.


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Region's share of the federal investment

projects increased to approximately 20%within five years, and maintained.

The ground for starting exports prepared,aimed to support the economy atprogressive rates within a five-yearperiod.

Increased tourists' spending from US$

320 million in 2009 to US$ 1 billion by2016.

Increased rate of mining and extracting-based economic activities, and related

metal industry to over 25% of overall

investment in kurdistan

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