Umbrella Company: 

Independent contracting in Iraq isn’t always straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.

Before you consider taking a contract in Iraq, you should be aware of what you’re getting into – and how you can make it simpler

Difficulties of Contracting: 

Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Iraq.

If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.

Also, are you familiar with the intricacies of the tax system in Iraq, as well as your own country’s laws on overseas earnings? If so, good on you!

However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Iraq and your home country can seem like full-time work in itself.

How Umbrella Companies Work : 

Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.

They’re called Umbrella Companies (or, contractor management companies).

Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.

Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Iraq. Even better, most are experts in Iraqi and expat tax law, meaning they’ll also help you optimise your earnings in Iraq.

Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.

Why Use an Umbrella Company : 

Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.

When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.

While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Iraq (which means avoiding fees, fines, or even worse penalties).

How We Can Help You: 

There’s a huge variety of Umbrella Companies with different specialities and advantages in Iraq. How do you find the right one for your circumstances?

We work closely with Umbrella Companies all throughout Iraq and match contractors with the right company for them. If you’ve already secured a contract in Iraq, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).

Tax In Iraq

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in Iraq is complying with the country’s tax system. As well as paying tax in Iraq, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income: 

If you’re working in Iraq under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Iraq for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Iraq, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Iraq through PAYE is left with the prospect doing everything themselves.

Do you know much about Iraqi Tax Law? Does Iraq have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Iraq can range from 3 to 15 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in Iraq, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax : 

Contractors in Iraq are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Iraqi umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Iraqi taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Iraqi tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in Iraq, many of whom are experts in tax and immigration laws. If you have any questions about tax in Iraq, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Iraqi work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Iraq but without the overhead of directly dealing with the Iraqi tax authorities. Get in touch with us today for some reliable advice on tax in Iraq!

When Do You Need to Lodge Your Tax Return?: 
31 March (1 March in the Kurdistan region)
Tax Filing Deadline : 
31 March (1 March in the Kurdistan region)
Can you file it online? : 
Iraqi Dinar (IQD)
Tax-free Threshold in: 
Grossed Income: 
0 - 250,000
Tax Rate: 
Grossed Income: 
>250,000 - 500,000
Tax Rate: 
Grossed Income: 
>500,000 - 1,000,000
Tax Rate: 
Grossed Income: 
Tax Rate: 
How long does it take to set up: 
26-27 days
How much does it cost: 
IRD2,295,000 – IRD2,415,000
Is it easy? : 
Starting a Business Rank: 154/190 (Source: World Bank)
How to File Taxes in: 

Your employer is required to withhold taxes for you and file tax returns on your behalf.

If you are employed in the Kurdistan region, your employer will file your taxes on a quarterly basis (as of 21 April, 2017). The due date for each quarter’s filing and payment is the 21st day after the end of the calendar quarter (i.e. 21 April, 21 July, 21 October, and 21 January).

If you are employed in other regions, your employer is required to file and pay taxes on your behalf by the 15th day of every month.

The relevant tax forms for the Kurdistan region can be found on the Kurdistan Ministry of Finance’s website in Arabic and Kurdish, here. The relevant tax forms for other regions can be found on the Iraqi Ministry of Finance’s website in Arabic, here.


Taxes for the Kurdistan Region: In the Kurdistan region, a 5% tax is imposed on basic salary and any allowances in excess of 30% of the basic salary.

Deductions: Individuals receiving employment income from the private sector are entitled to annual deductible allowances at the following amounts, based on age and/or marital status.

  • Personal allowance for bachelor: IQD2,500,000
  • Personal allowance for married person: IQD4,500,000
  • Age allowance (if over 63 years of age): IQD300,000
  • Child allowance (where the child is under 18 years of age, engaged in full-time academic studies, and has no income): IQD200,000

Other deductibles include:

  • All employment income received from the government, public institutions, and local authorities;
  • Social security contributions; and
  • ‘Risk allowances’ (not exceeding 30% of the basic salary).
Does the 183 day rule apply in: 


When do you become a tax resident in: 

You become a resident in Iraq when you:

  • You stay in Iraq for a continuous period of 4 months; or
  • You stay in Iraq for a total of 6 months during the income tax year.
Am I taxed on my global income in: 

Residents are taxed on their global income. Non-residents are taxed on their Iraq-source income only.

Iraq Taxation

Moving to a new country is never simple. Not only do you have to relocate your entire life, you also have visas to organise, jobs to find and an entire new tax system to familiarize yourself with. When you’re contracting in Iraq there are several issues which could arise relating to taxation, and learning what to expect helps you tackle them more effectively. Doing your own taxes might not be the best option, but employers don’t usually work out contractors’ taxes through the pay as you earn (PAYE) system. This means you’re either faced with several hours in administrative hell or will have to find a suitable alternative for dealing with Iraq taxation.

Iraq Taxation

Do You Only Have to Pay Income Tax in Iraq?

One of the most confusing aspects of Iraqi tax law is whether or not you’ll still be eligible to pay tax in your home country for the money you earn in Iraq. Most countries have agreements in place to guarantee that you don’t have to pay taxes on the same money twice, but you might still have to make some payments in your home country. The rules regarding this aren’t clear, so it’s useful to get advice from experts in Iraq taxation.

Are There any Deductions That Can Reduce Income Tax in Iraq?

You might be eligible for some deductions whilst you’re working in Iraq, but learning all of the different possibilities is extremely time-consuming. The basic rate of income tax can vary according to your earnings level and circumstances, and there is also public health insurance and social security to worry about. To keep more of your money, it’s useful to find an expert in Iraq taxation and business culture in Iraq to explain the various possible benefits to you. You might not be eligible for them all, but learning about expat tax deductions is extremely important.

How Do I Pay Income Tax in Iraq?

Permanent employees are fortunate because their employers will usually process their Iraq income tax through the PAYE system. If you’re contracting in Iraq, you’ll probably have to calculate and make your tax payments yourself. You’ll have to read up on tax laws, fill in myriad forms and spend hours hunched over a calculator working everything out. There is an easier way for contractors to pay their income tax in Iraq and it almost entirely removes the admin work.

How Do Umbrella Companies Help with Iraq Taxation?

An umbrella company can make organising your income tax in Iraq a lot easier for your contract work in Iraq. The basic premise is that by processing your wages through them, they technically become your permanent employer. This means that they can handle your taxes through a PAYE system, but you’re not tied to any particular contract or just one client. You work as you ordinarily would, submit your timesheets to them and receive a prompt payment. They’re experts in local tax law, so you’ll also keep more of your earnings.

How We Can Help with Iraq Taxation

We work closely with several umbrella companies in Iraq, and can help you find one to handle your tax payments for you. We have a detailed knowledge of the specialist services they provide, and we’ll suggest the best options for your needs. If you just have a question about Iraq taxation, we’ll ask the experts for an up-to-date and reliable answer. If you’re a contractor in fields such as telecommunications, business analysis, IT project management, software development, testing or oil and gas, we can help you keep more of your earnings. Our service is completely free, and you’re under no obligation. Contact us today for help with Iraq taxation!

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The sitaution in Iraq is very fluid with the iterim government changing their policies regularly. However, currently there is no personal income tax liable for international contractors in Iraq so it is a highly lucrative place to work. If you’d like to discuss net retentions further for Iraq apply for a free assessment and provide us with information on your specific situation.

Iraq Tax

With our vetted Contractor Management partners we will ensure that you net the highest % possible of your gross income whilst ensuring that you are compliant with all Iraq regulations and those of your home country.

Iraq Tax Saving

Tax Rate In Iraq

What is the tax rate in Iraq?

Finding out about the tax rate in Iraq is absolutely essential if you’re considering working in the country. The tax system in Iraq can be broken down into company tax, income tax, payroll tax and sales tax, and learning about these various components gives you a good idea of how much you’ll be paying during your stay. Iraqi taxes are generally variable, so the values included here are just averages. If you want to keep more of your earnings, you should consider using a contractor management company for your income tax in Iraq.

Tax Rate In Iraq

Corporate Tax Rate in Iraq

Corporate tax or company tax in Iraq is the amount taken from the earnings of corporations. If you own a corporation in Iraq, you can expect to pay a fixed percentage (we don't have exact figures available currently) from your earnings. The specific rate you receive is dependent on a number of factors, such as the amount your company makes per annum.

Income Tax Rate in Iraq

Income tax in Iraq is charged to individuals, and depending on the company you’re working for you might have to calculate and submit returns yourself. Anybody freelancing or contracting in Iraq will probably have to handle their taxes this way. Because individual earnings can be so different, the income tax rates in Iraq vary according to your level of income. Unfortunately we don't have up to date income tax rates available at the time of writing.

Payroll Tax Rate in Iraq

Payroll tax in Iraq is very similar to income tax but it’s paid by your employer as you earn. Social security fees, public health insurance and other deductions are all included in this payment and other deductions in Iraq are dependent on your income.

Sales Tax in Iraq

Sales tax in Iraq is applied to products you purchase using your already-taxed income. The rate of VAT in Iraq (value-added tax) is not available at the time of writing this article but we will update this information soon. Sales Tax usually has several brackets depending on the type of product being purchased. There is nothing you can do about sales tax, but it’s good to know how much is added on to the cost of purchases.

How to Get the Best Tax Rates in Iraq

The amount you pay for tax in Iraq is heavily dependent on your income, but there are still many courses of action you can take if you have a good understanding of the system. Hiring an accountant in Iraq will get you a better rate, but can be pretty expensive in itself. Using a contractor management company is one of the easiest ways to keep more of your earnings. Contractors can use the company as their “permanent” employer but still continue taking contracts freely. The company collect your payments, handle your taxes and then send you the remainder. They’re experts in Iraq taxation, so they guarantee that you take home the biggest proportion of your earnings.

How We Help With Iraq Taxation

We’re partners with numerous contractor management companies in Iraq, and we know which ones specialise in the tax system in Iraq. If you have any questions, we’ll check with the experts to ensure you receive the best advice. We also regularly help contractors like oil and gas workers, business analysts, IT project managers, telecommunications workers, testers and software developers keep more of their earnings by using a contractor management company. We’ll suggest the best options to you, and can help you determine the best course of action. Our advice is completely free, and you’re under no obligation, so get in touch with us today!

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Tax Calculator Iraq

This is a placeholder for the tax calculator for Iraq. It will calculate Iraqi Income Tax and wage taxes. We will put the content up when we receive enough interest. If you'd like a copy of it please contact us

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Iraqi Umbrella Companies

We have heard of contractors refusing a contract in Iraq simply because of the administrative nightmare. This nightmare can turn into a sweet dream with a Iraqi umbrella company. Without one, you may find yourself spending all your time on calculating expenses, handling taxes and submitting all necessary forms. This means less time for work and finding new clients. We help contractors such as business analysts, software developers, gas and oil workers, IT project managers and many more partner with reliable umbrella companies to manage their administrative tasks and payments. We'll even help you find one to sponsor your work permit if necessary.

Understanding Umbrella Companies

The purpose of an umbrella company is to manage administrative tasks, paperwork and payments for you. This frees you to focus on the job and client. Technically, the umbrella company becomes your employer, but you still have the same freedom as an independent contractor. Instead of you receiving payment directly from the client and managing taxes and fees yourself, the umbrella company receives the payment, subtracts all taxes and fees and then pays the contractor. This ensures you always comply perfectly with all taxes and other legalities in Iraq. If you feel overwhelmed by the tax system contractors face in Iraq, let an umbrella company save you hours of frustrating time and effort.

Iraqi Umbrella Companies

Umbrella Company Benefits

Taxes can greatly reduce your final earnings if you don't fully understand the system. Umbrella companies are experts in the tax system in Iraq, helping you get the highest possible earnings from every contract. All rules and regulations are complied with. The end result for you is less taxes and administrative hassle. You manage your timesheet and a list of expenses. As soon as the umbrella company receives the payment from your client, you are paid. In most cases, the company handles all client payment collecting, equalling more time for you to spend on your work.

If you're a contractor that wants to spend less time trying to calculate and pay taxes and chasing payments, an umbrella company is perfect for you. A company is available for all situations, regardless of the salary range or contract term. By using an expert team to manage your payments, you receive the highest possible portion of your income. Umbrella companies mean never worrying about issues with local tax authorities. You will even be given tax receipts and pay slips for your personal records.

In addition to time and financial savings, some umbrella companies will serve as your sponsor for a work permit. The majority of countries require a work permit before you can be paid for any work completed within the country. Without an umbrella company, you are forced to find a sponsor through a local company in that country. For independent contractors, this can be extremely difficult. To make it less stressful when becoming a contractor in Iraq, an established umbrella company will sponsor your work permit.

Your Umbrella Company Guide

Even with all the benefits, you still have to choose the right umbrella company to meet your individual needs. This can be a time consuming process in itself. We can make this process much easier, freeing up your time for obtaining new contracts. We provide you a selection of options that best meet your situation. You then choose between umbrella companies with different payment structures, diverse specialisations and varying services.

Our goal is to provide you with knowledgeable, solid advice that is easy to understand. Our professional team seeks out the perfect umbrella company based upon your situation and needs. With our extensive database of service providers, we are able to match you with the services you require. Since we already understand the services and details about each company, we can explain which ones are the most beneficial to you. You are free to ask questions at any time about specific companies or umbrella companies in general.

We believe in helping contractors save money. As such, we offer this valuable service at absolutely no cost to you. If you are considering becoming a contractor in Iraq, don't hesitate to contact us immediately. We will provide you with a reliable overview of your options and guide you to the best umbrella company. Once you've found the right one, sign up and lose the stress of calculating taxes, managing payments, collecting payments and finding a work permit sponsor. You should be focusing on your work, not admin.

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Payroll Tax Calculator Iraq

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Iraq Work Permits

A Contractor's Guide to Work Permits: 

Immigration is one of the primary concerns for any contractor hoping to start working in Iraq. Permanent employees will find it easy to get their Iraqi work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.

The Iraqi work permit, more commonly known as the تأشيرة عمل or tashirat eamal, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Iraq is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.

How Can Umbrella Companies Help You Get a Work Permit in : 

As your permanent employer, umbrella companies are able to sponsor you for your Iraqi work visa provided they’re on the register of approved sponsors. Many different companies offer this service, because it makes contracting in Iraq infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit. They protect you from the bureaucratic “rain” of legal compliance with the Iraqi immigration authorities. They can even deal with the Iraqi Embassy directly. 

Through their service you may be able to use a business visa to get started quickly and then transition to a work visa in Iraq. It depends on your specific visa requirements. Be aware you may have to register for a residence permit in Iraq.

Immigration & Work Permits

Organising Work Permits for Iraq can be a difficult process. The rules are regularly updated to reflect market conditions and government policy. We try to keep our information up to date as much as possible but we rely heavily on our local partners who are the specialists.

Iraq Immigration

If you aren't able to find the information you want on how you can contract in Iraq or how to organize Iraq Work Visas for your staff please contact us with your circumstances and we can always assist you. Our sponsorship partners are specialists in local immigration laws including sponsored contractor work visas for Iraq.They are able to sponsor suitably skilled contractors or your employees on Iraq Work Permits.

Iraq Contractor Work Permit

The benefits include:

- full compliance with local immigration laws

- freedom to work with any end client for any duration

- security and comfort of using a long established international market leader

- visa allows for entry of spouse and dependants

- local salary compliance

- understanding of dual taxation implications through regional offices


Additionally they can offer you excellent tax & financial management advice to ensure you stay on the right side of the authorities whilst keeping the highest possible % of your gross billing. APPLY NOW!

Iraq Iqama

Contract in Iraq

Contracting in Iraq - FAQ

What is the monthly cost of using an Umbrella Company in Iraq? 

Between 3 to 15% depending the service required.


How long does it take to get a work permit in Iraq?

1 month.

What is the estimated net retention in Iraq for a contractor earning USD 500 per day?

80% but depends on how the pay is structures.

What is the estimated net retention in Iraq for a contractor earning USD 1000 per day?

80% but depends on how the pay is structures.

*doesn’t include fee for work permit or other immigration costs

More questions? See the rest of the FAQ for more information on the Iraq work permit process

Getting Started

Taking a contract in Iraq means tackling numerous administrative headaches. Before you even begin working as an independent contractor, there are complicated payroll, tax, and immigration issues to work out.

All this complex admin comes on top of any personal matters you need to sort, as well. Even worse, it can be a huge nuisance when you’re already in Iraq, trying to adjust to a huge relocation – and a new contract!

Streamlining even a few of these obstacles can dramatically improve your experience.

Luckily, there are ways to simplify more than just a few…

Freelance Iraq Requirements


One of your first hurdles will be securing the proper work permit. To get one, you usually need an employer to sponsor you. This means they take full responsibility for you while you’re working in the country.

That’s fine for full-time employees, but what about independent contractors?

Many clients won’t offer sponsorship for a temporary worker and, even if they do, you’ll need to apply for a new permit for each new contract. This creates a mountain of paperwork each time you want to work with a new client.


Additionally, you need to figure out what you owe (if anything) in taxes for your work in Iraq.

Of course, there’s also your country of tax residency; you’re likely to owe something on that front, too.

You can take advantage of certain tax structures, but doing so requires a strong familiarity with expat tax law in Iraq.

Benefits of working through an Umbrella Company in Iraq

You can outsource a lot of these admin problems to specialists at an Umbrella Company (or contractor management company).

An Umbrella Company basically becomes your full-time “employer,” even though you stay in control of your workload, clients, and schedule. The Umbrella Company simply collects and processes your payments, filtering out social security and any necessary fees.

They can also sponsor your work permit, meaning you get to take on new clients without the aggravation of applying for a new permit each time.

Even better, most specialise in tax law for contractors in Iraq and can ensure you’re keeping the largest amount of your earnings as possible. They can even assist you with reducing your tax liability back home.

In short, you get all the benefits of a working for an employer, without sacrificing your autonomy as a contractor.

How to get started with the right Umbrella Company

There’s a lot of Umbrella Companies out there; finding the right one for you can be daunting.

We’ve done the research on Umbrella Companies in Iraq, and know how to match contractors with the perfect company. If you’ve already secured a contract, get in touch with us and let us know your situation. We can get you started with the best Umbrella Company for you, or simply offer feedback on contracting in Iraq.

Oh, and we don’t charge anything. Drop us a line and get free, honest, simple advice.

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Additional FAQ - work permits & payroll


What is the cost of a Work Permit in Iraq?

$600 USD.

What documentation is required for a work permit in Iraq?

Passport, 2 passport photos, certified copies of education certificates, employment contract, police clearance certificate (dependent on nationality).

What is the work permit process in Iraq?

Local organisation makes the application in Iraq, once approved locally candidate must make an application at the Iraqi Consulate in their home country.

Can you transfer from a business visa to a work permit in Iraq?


Can we organise a business visa for Iraq?


How long does it take to process a business visa in Iraq?

7 to 10 days

How much does a business visa cost in Iraq?

$300 USD.

Can nationals of certain countries enter Iraq without a business visa (ex. on an entry visa or visa waiver)?


$3000 USD.

How does payroll work in Iraq?

Tax and social security deducted at source by a local company and paid to the local tax authorities.

IT Contracting in Iraq

IT contracting in Iraq is a great opportunity for specialists. To make the most of it, you’ll need a strategy for handling the numerous admin responsibilities.

Iraq IT Contracting

Going it alone: figuring out your visa and taxes

First off, you’re going to need a work permit to do any contracting in Iraq. You should also be aware that you generally need an employer to sponsor you for this permit.

That’s tricky for contractors, because a lot of clients don’t offer sponsorship. Even if they can, you’ll need to find a new sponsor for each new contract. If you want to take on multiple contracts during your time in Iraq, this creates an avalanche of paperwork – and takes up even more time.

Moreover, you’ll need to sort your taxes – in Iraq and back home.

Using an intermediary: benefits of working with an Umbrella Company

Many contractors outsource burdensome admin tasks to an Umbrella Company.

The Umbrella Company essentially acts as your employer, even though they don’t control your clients, your workload, or your hours. They collect payments from the end client, filter out the necessary social security and other fees, and send you a net wage.

They also sponsor contractors for work permits. This means you’re working under a single permit, instead of constantly applying for a new one (or having to turn down clients who can’t sponsor you). You can find out more info on permits and visas in this FAQ.

They’re also experts in local tax law, so you don’t have to navigate a whole new tax system on your own. They ensure you keep the largest amount of earnings as you legally can. They can also help you reduce any tax liability back home. 

You keep more of your earnings, all while staying on the right side of tax authorities in Iraq and in your country of tax residency.

Basically: you get all of the benefits of a full-time employer, without giving up any of your independence as a freelance worker.

Get in touch with us if you’d like simple feedback on IT contracting in Iraq.

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Working In Iraq

Whether you’re in IT, oil and gas, software development, or telecommunications, working in Iraq requires a lot of forethought. Will you be subject to any visa restrictions, and will that affect future contracts in Iraq? How will you know what you owe in taxes, and how will you pay them?

Sometimes it’s hard to find reliable answers to questions like these. Keep reading to learn more about the issues that go along with contracting in Iraq, as well as how you can address them efficiently.

Working In Iraq

Getting Started: Do You Have a Contract Lined Up in Iraq?

If you don’t already have a potential contract in Iraq, you have a couple extra steps.

First, you need to research the demand in Iraq for your skillset. This is a crucial step; without it, our help is premature and you’ll lose out on time that would be better spent looking for work.

After you’ve extensively researched your prospects, check out our guide for finding work.

If you’re already negotiating or considering a contract and want to skip to how we can help you, jump here.  

Are There Any Restrictions on Iraq Work Permits?

Once you have a potential job, it’s time to start thinking about work permits. To work in Iraq, you need a sponsored work permit.

This obstacle is a lot simpler if you’re a full-time employee; their employers can simply sponsor their permit. However, end clients are less likely to sponsor temporary workers.

Moreover, even if the client can sponsor you, you’ll need a new sponsorship each time you take a new contract in Iraq.

How Does the Tax System in Iraq Work?

As an independent contractor, taxes can be a headache even if you’re already familiar with the tax system.

When contracting in Iraq, you face both a foreign tax system and potential tax liability in your home country. You’ll want to ensure tax compliancy (while not paying more than you have to), but that can be difficult without specialist advice.

Facing these issues on your own is a huge time commitment and can distract from the reason you’re there in the first place: your contract.

Is There a Way to Make Working in Iraq Easier?

Yes. A popular solution for contractors is to use a contractor management company (or an “Umbrella Company”).

An Umbrella Company acts as your “employer,” despite the fact that you maintain your independence as a contractor. The Umbrella Company collects and processes your payments, deducting the necessary amounts for tax or social security. They can also sponsor you for a work permit, allowing you to take on different contracts without having to seek new sponsorship each time.

Furthermore, as specialists in tax law in Iraq, they can assure that you’re keeping as much of your earnings as you legally can.

How We Help with Working in Iraq

If you’re already negotiating a contract in Iraq, an Umbrella Company is often the most effective way to eliminate the headaches of working in Iraq.

Unfortunately, there are many different Umbrella Companies in Iraq, each with their own advantages, fees, and structures. Finding the right company for you can be just another chore on an increasingly long list of things to sort.

For free, we help match contractors with Umbrella Companies. With a broad database of contractor management companies and years of experience working with local partners in Iraq, we can put you in contact with the best company for your position.

We listen to your individual circumstances and offer straightforward feedback. We will never forward your information without your permission, and we don’t charge anything, ever. Get in touch with us, let us know your details, and cut through the hassles of working in Iraq.

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Expatriate Tax Planning In Iraq

As a contractor in Iraq, two of your biggest tax concerns are probably going to be:

  1. Paying less taxes, and
  2. Reducing the admin involved in paying them.

Maybe these goals are obvious, but actually achieving them takes some planning. Having a strategy is crucial, because you may be able to work completely tax free.

Expatriate Tax Planning In Iraq

Organising your taxes in Iraq on your own

Not only is the Tax system in Iraq dense, it’s updated regularly… meaning you’ll need to do a lot of studying if you want to organise your own taxes.

Generally, a taxpayer is any person who:

  • Is domiciled in Iraq;
  • Has resided in Iraq for 183 days or more;
  • Derives income from sources in Iraq.

As an independent contractor, you may be eligible for certain tax advantages (or liable for taxation in other ways). You may not need to pay any taxes in Iraq at all. And, of course, you’re going to need to sort out what you owe in your home country.

Most people need some sort of specialist advice to begin understanding their tax liability in these situations. However, even after understanding what’s required of you, you will likely need to spend hours going over the return in meticulous detail.

Can employers organise Iraq expatriate taxation?

Yes, some can.

Unfortunately for a lot of contractors, though, most clients don’t offer that service to freelance workers. This route requires little to no effort from you, but it can be a huge burden to pick and choose your clients based on which ones can offer this service.

Are there any other options for expatriate tax in Iraq?

Many contractors choose to work under an Umbrella Company.

An Umbrella Company will calculate what you owe in taxes and fees, and process your payments. They act as your “employer,” although you still work exactly like you would as a contractor.

This allows you to pay as you earn, similar to having an employer or client organise your taxes. In this scenario, however, you don’t have to worry about who’s going to organise your taxes each time you take on a new contract. 

Send your details for more information

How To Work Tax Free in Iraq

As a contractor, you’re probably interested in legally maximising your net earnings. Better yet, you might even work out how to work tax free in Iraq.   

Unless you’re already an expert in the tax system of Iraq and have lots of free time to pore over your return, you should consider seeking specialist tax advice. Otherwise, you risk paying too much, or mistakenly violating tax law in more than one country.

Work Tax Free

Offshore payments for contractors in Iraq

Many freelance workers opt to be paid in offshore accounts. Regardless of where you’re paid, you still need to pay your appropriate social security and taxes. However, these accounts often afford more flexibility and privacy than local accounts. Many offshore establishments are also experienced in working with international clients.

Your contract, your work, and the tax law of your home country can all influence whether or not offshore payments are the best option for you.

To sort this out, your simplest option is working through an Umbrella Company that specialises in offshore payments. Not only can they help you determine whether you’re eligible to work tax-free, they can get you set up with an offshore account.

This combines the benefits of a standard Umbrella Company with a deep understanding of international tax:

  • Local payroll if required
  • Low management fees
  • Minimal administration requirements for the contractor
  • Fast payment processing
  • All necessary insurances and registrations (e.g. Professional Indemnity and Public Liability Insurance)

What about tax liability in your country of residency?

Even if you don’t owe any taxes in Iraq, there’s a fair chance you’ll still have to pay something to your country of tax residency.

Figuring out your tax liability isn’t easy, though. The tax systems of both Iraq and your home country will affect how much you owe (if anything).

We strongly recommend consulting a tax expert who can help you determine:

  • if you can take advantage of a dual taxation agreement between the two countries
  • if you can offset earnings against expenses
  • if you can use pension contributions as a tax efficient means of reducing your tax liability
  • if you’re better off working through a local Umbrella Company, setting up your own Limited Company, working PAYE, or Self Employed.
  • whether a trust scheme helps reduce your tax liabilities.
  • how you can legally approach working tax free in Iraq.

Tax Minimization

Get in touch with us if you’d like to know more about minimizing your taxes in Iraq.

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Oil and Gas Contractor in Iraq

Thinking about doing some oil and gas contracting in Iraq? It’s a great opportunity, but you need to be aware of your responsibilities beforehand.

Visas for oil and gas contractors in Iraq

You may be tempted to enter the country on a tourist or business visa, especially if you’re on a regular Fly-In Fly-Out (FIFO) rotation.

We strongly advise against this.

Working without the correct permit is often illegal and carries harsh penalties. This can result in fines, immigration nightmares, and legal trouble for you (and the end client).

How to get the right visas and permits

You usually need a work permit to contract in Iraq. To get one of those, an employer must sponsor you. Unfortunately for freelance workers, end clients are often reluctant to sponsor contractors.

Unless you’re already well-acquainted with immigration and employment law in Iraq, it can be tedious and stressful to sort out what you need and how to get it. Learn more about the necessary documentation and application process for visas and permits here.

How to simplify getting the right permit

You don’t have to approach these administrative barriers on your own. There are experts who specialise in helping contractors work in Iraq.  Umbrella Companies can sponsor you for your work permit, and even help you figure out your taxes in Iraq and at home.

You technically become an “employee” of the Umbrella Company, without sacrificing your independence as a contractor. This way, you maximise the benefits of oil and gas contracting in Iraq, while minimising the aggravating admin and immigration barriers.

Send your details for more information

Using your UK Ltd Company in Iraq

Are you a UK contractor with your own UK Ltd Company? Are you thinking about using your Ltd Company in Iraq for contracting work?

There are clear benefits to using your own Ltd Company, but there are also some problems that need to be addressed beforehand.

Benefits of using your own UK Ltd Company

  • You’ll be dealing with a familiar tax process, provided you and the company don’t become liable for tax in Iraq.
  • You can claim expenses for travel, relocation, etc.
  • You’ll maintain revenue continuity.

Downsides of using your UK Ltd Company

Despite these potential advantages, using your Ltd Company can incur further tax liability and cause substantial immigration and visa setbacks. Specifically, some of the downsides include:

  • Creating permanent establishment in Iraq.
  • Being in Iraq for more than 183 days triggers tax residency for UK citizens. Once this happens, you’re required to be on a local payroll.
  • Preventing the use of Double Taxation Agreements.
  • Possibly paying corporation or company tax in Iraq and in the UK.
  • Creating exposure to more tax rates
  • Possibly needing to register for VAT/sales tax in Iraq.
  • Registering yourself on a local payroll as the company’s employee.
  • Doing your UK administration from overseas, which can be excruciating.
  • Possibly being required to register your company within the tax system in Iraq(not recommended!).
  • Having to de-register your company, and ensuring everything is complete to the satisfaction of both tax authorities.

Using your Ltd Company in Iraq can open you to further costs, taxes, and admin.

Possibly even more of an issue will be securing the right work permit while using your own Ltd Company. In general, you won’t be able to sponsor yourself, meaning it will be best to explore other options for your contract in Iraq. You can learn more about permits and sponsorships in our FAQ

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Companies Sending Staff to Iraq

At the bottom of this page we have detailed information about our solution for Iraq, including management fees, work permit fees & processing times, payroll, taxation, and social security levels.

If you’re looking to send staff to Iraq for an overseas project, it can be difficult to find clear information on an unfamiliar jurisdiction, much less efficient solutions. You’re facing complicated issues, in addition to a host of problems you may not have even considered yet. To compound these difficulties, you’re likely under sizable time and budget constraints.

Contractor Taxation offers a comprehensive solution to these concerns, helping companies extend into new markets and rapidly deploy expatriate resources. Read more about the kinds of goals your company could be achieving, instead of using time and resources to research Iraq’s intricate tax and immigration information.

Taxation in Iraq

One of a company’s biggest concerns will be guaranteeing total compliance with any and all tax requirements. In order to safeguard both itself and the end client, a company needs to consider:

  • Personal income tax for their employees in Iraq
  • Social security costs
  • Payroll tax in Iraq
  • VAT/Sales tax in Iraq
  • Withholding tax in Iraq (if you’re in the U.S., learn more about withholding tax here)
  • Permanent establishment

Work Permits for employees in Iraq

Another major concern will be your ability to secure the appropriate Work Permit for your employee.

Employees need to be sponsored for a permit. To sponsor an employee yourself, you will need to be incorporated locally and be licensed to sponsor foreign workers. If you’re not already at that stage, organising a permit is an impossibility until you complete the (often lengthy) process of local incorporation and licensing. Depending on your project’s time frame, you might need employees on site quickly, making a Work Permit even more problematic.  

The end client may or may not be willing to sponsor a temporary worker, but this raises complicated payroll and employment issues. Sponsors often need to pay the sponsored employee, adding another layer of complication to the already-complex process of taking on a project in Iraq.

You might be able to explore alternate visas for your employee, or even use one visa and transfer to a Work Permit in order to expedite secondment. However, missteps can cost even more time (and money). If an employee is working on the wrong visa, you could be opening the end client to serious legal and financial risks.  

What is a management company and how can it help send your staff to Iraq?

Essentially, a management company operates like an outsourced employer. They sponsor your staff on local Work Permits (where required), employ your staff and payroll them locally. They deduct all local taxes and social security from the assignees’ pay at source, and then pay these to the local tax authorities. In short, they reduce your administrative burden, while mitigating the business risks of employee secondment.

Taxation: As specialists in local tax law, they ensure that an employee 1) is compliant with all regulations, and 2) keeps the largest possible portion of his or her earnings. This reduces your administrative work, along with any risk of tax violation in Iraq.

Immigration: Management companies can sponsor Work Permits for staff, eliminating one of the largest barriers of project work in Iraq.

If you urgently need staff on site, a management company can also help organise a Business Visa for the employee. They can then help the employee transition to a Work Permit, assuring that your employees start work faster while maintaining compliance with Iraq’s immigration regulations. 

Your company’s role: Although a management company involves a fee, you typically save money and time by reducing your administration, as well as potential liability. Why not get a quote and compare the total cost of employment?

Iraq payroll services

Firstly, do you have a local company in Iraq? If so, is it appropriately registered to run a payroll, or to deduct and file taxes? Does it have the right administrative staff and is it capable of staying up-to-date with local tax requirements? Is it able to sponsor international hires for Work Permits?

Without a suitable local company already in Iraq, you need to consider a few different options.

Setting up payroll in Iraq

You can incorporate locally, get registered, and hire staff to handle payroll in Iraq. This option depends on your circumstances; will your project justify the cost of incorporating locally? Will you be able to incorporate within the time limits of the project? Is it even possible to set up a company yourselves with local ownership requirements? Will this company be able to sponsor international hires on local Work Permits?

If you believe this is the correct route for your company, you likely need to consult a local accounting advisory firm. Time and budget permitting, you can also consult an international tax specialist like PWC or KPMG. Some of our partners offer assistance to foreign companies incorporating locally; check with us if you are interested.

Even if you decide that establishing a local payroll in Iraq is the right option for you, you should still consider using a local payroll provider.

Using a local payroll provider

The time frame of your project may not justify local incorporation. In that case, a payroll provider is a more efficient solution. Even if you plan on incorporating in Iraq, you can reduce security risks by using a payroll provider while you get set up. This solution is simple and only requires a monthly, commitment-free operational cost.

Payroll providers versus management companies

Outsourcing payroll can mitigate the risks and liabilities of sending employees to Iraq, but it’s prudent to consider using a management company rather than just a payroll provider. A management company specialises in all of the same payroll tasks, plus a multitude of other services.

Most notably, they are able to sponsor Work Permits for your staff. This means a management company can reduce immigration-related liability, in addition to their specialist tax and payroll solutions.

Getting started with a management company in Iraq

Co-employment eliminates your legal responsibility and dramatically lessens your administrative load. This frees your company to devote its resources to higher value business objectives, and helps maintain consistency across borders. However, different management companies offer different expertise, making it important to find the right company for your project.

Let us know your goals and we can give you easy, concise information on sending your staff to Iraq.  Our advice is free and doesn’t obligate you in any way.

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Work Permits in Iraq: Frequently Asked Questions




Can a management company sponsor Work Permits for foreigners in Iraq? 


How long does it take to get a Work Permit in Iraq?

1 month.

What is the work permit process in Iraq?

Local organisation makes the application in Iraq, once approved locally candidate must make an application at the Iraqi Consulate in their home country.

What documentation is required for a Iraq work permit?

Passport, 2 passport photos, certified copies of education certificates, employment contract, police clearance certificate (dependent on nationality).

What is the cost of a Work Permit in Iraq?

$600 USD.

Can you transfer from a Business Visa to a Work Permit in Iraq?


$3000 USD.


Business Visas in Iraq: Frequently Asked Questions



Can we organise business visas for Iraq?


How long does it take to process a business visa in Iraq?

7 to 10 days.

What is the cost of a Business Visa in Iraq?

$300 USD.

Can nationals of certain countries enter Iraq without a Business Visa (for example, on an entry visa or visa waiver)?



Management Companies in Iraq: Frequently Asked Questions



What is the monthly cost of using a management company in Iraq?

Between 3 to 15% depending the service required.

What is the estimated net retention for an assignee in Iraq earning USD 200,000 per year?

80% but depends on how the pay is structures.

What is the estimated net retention for an assignee in Iraq earning USD 100,000 per year?

80% but depends on how the pay is structures.


Payroll in Iraq: Frequently Asked Questions



How does payroll work for employers of foreign nationals in Iraq?

Tax and social security deducted at source by a local company and paid to the local tax authorities.

What is the monthly cost to outsource payroll in Iraq?

*update pending

Taxation in Iraq

When navigating taxation in Iraq, you need to consider issues like double taxation, permanent establishment, withholding tax, and your employee’s personal tax. It’s easy to make missteps when dealing with foreign tax law; these missteps can expose you and your client to serious liability. Outsourcing the administration to a local tax specialist is a valuable step in co-employment risk mitigation.

Reduced Tax in Iraq

Personal income tax for your employees in Iraq

Depending on your country, your employees’ income may be subject to different taxation in Iraq. If your employee fails to comply with local regulations, your company could be liable. Most employees will likely need some sort of guidance to ensure they meet all local income tax requirements.

Withholding tax in Iraq

Withholding tax (or “retention tax”) enables governments to collect tax revenues from the economic activities of companies operating within its borders. In an international context, it’s generally imposed on a cross-border income payment from a source in Country A to a resident in Country B. In order to properly budget and plan for an overseas project, it’s important for your company to be aware of what sort of withholding tax you’ll be facing in Iraq.

Learn more about withholding tax here (Note: although this information was written with American businesses in mind, the general concepts should apply regardless of your country of origin).

Permanent establishment in Iraq

Many international tax treaties with Iraq afford greater tax leniency for companies that do not have permanent establishment (PE) in Iraq. Small, seemingly inconsequential decisions can establish a “fixed place of business” and create permanent establishment.

It’s worth noting that, in most scenarios, a company working through independent local agents will not be considered to have created permanent establishment. However, it’s important to seek specialist advice to ensure you are legally avoiding PE. Read more about the implications of permanent establishment and how to avoid it.

Outsourcing tax compliance in Iraq

There are a number of other tax issues you will need to consider, such as VAT/sales tax, social security costs and payroll tax. 

Tax compliance is crucial for your company, but complying with all regulations in a foreign tax system requires an abundance of resources. Many of these resources would be better applied to high value business goals and strategies, perhaps making overseas projects seem too risky or burdensome.

However, you can reduce your company’s liability and retain valuable resources by outsourcing relevant tax duties to a local specialist.

Ensuring tax compliance through a management company

Researching the intricacies of tax law in Iraq can be a strenuous undertaking, particularly since some regulations are liable to change. This means your company will need to devote significant resources toward tax compliance during your assignment in Iraq.

Outsourcing the administration to a local tax specialist can relieve you of administrative burden and, most importantly, protect your company against any tax-related missteps. A management company provides all of the services of a tax specialist and payroll provider, as well as assuming legal liability for your employees and sponsoring Work Permits. 

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Local Payroll Services in Iraq

One major roadblock will be payroll in Iraq. If you’re incorporated locally, you need to ensure that your local entity is legally capable of running a payroll. Even if you are considering local incorporation in the future, a local payroll provider reduces your liability in the interim. Further, a management company accomplishes all of the same payroll responsibilities, alongside numerous other specialist services that reduce your liability even more.

Local payroll in Iraq

Your employee will need to get paid in Iraq, but establishing a local payroll can be extremely difficult.

Even if you already have a local company, you need to confirm that it’s appropriately registered to run a payroll, and to file and deduct taxes. This requires sufficient administrative staff who are up-to-date on all tax requirements in Iraq.

Setting up a payroll in Iraq

To set up a local payroll, your company will need to incorporate in Iraq. This will be another issue necessitating extensive research; how long will incorporation take for your company, and how much will it cost? Depending on your budget and timeframe, a temporary project may not justify local incorporation. In that case, it’s more efficient to outsource the administration to a local payroll provider.

Even if you plan on incorporating locally, using a payroll provider can present an extra security measure while you complete the process. This enables you to second employees onto a work site immediately, without exposing your company to unnecessary risk.

Local payroll providers versus management companies

Management companies provide the same services as payroll providers, in addition to several other key services that a payroll provider cannot. A management company offers tax specialisation and runs payroll, but also sponsors Work Permits and takes over legal liability for your employee. It provides a single solution for multiple issues associated with project work in Iraq, streamlining co-employment and protecting your company from risky oversights and missteps. 

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Outsourced Employment in Iraq

Sending employees to Iraq means allocating significant resources toward complex administrative tasks, and keeping abreast of mutable, foreign regulations. Skimping on these efforts can dramatically heighten your company’s risks, but internal resources are often better spent on high value business goals and strategies. Outsourcing employment in Iraq means reducing, or even eliminating, most of your company’s liability, while streamlining administrative tasks and disencumbering internal staff. The most efficient way to do this is through a management company.

Employment outsourcing in Iraq

Managing expatriate resources involves a steady supply of administrative encumbrances; many of these burdens, such as tax regulations, frequently change. Consequently, a company must devote resources toward resolving complex administrative issues, as well as staying up-to-date with how these administrative duties might change.

We help companies expand internationally by streamlining administrative burdens and outsourcing them to our local partners in Iraq.

Human resources outsourcing

Companies are often better served by devoting human resources to more strategic, higher-value business goals. However, international assignments demand numerous complex functions.

Even in the largest corporations, it’s unrealistic to expect in-house resources to perform all of these functions. In order to get the highest value from international assignments, companies need to separate strategic, commercially sensitive functions from those that can be outsourced to a specialist provider.

Management companies in Iraq

Management companies in Iraq act as de facto employers, assuming legal responsibility for your employees. As their “employer,” we can sponsor employees’ Work Permits, which minimises waiting times and administrative burdens. Our partners in Iraq also specialise in local tax law and ensure total tax compliance. These services allow your company to focus less on administrative leg work and more on the higher value business strategies of international expansion. 

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PEO Services in Iraq

Professional Employer Organizations provide co-employment services, lessening your legal risk and streamlining administration that can otherwise monopolize in-house time and resources.

Co-employment in Iraq

Companies looking to expand internationally will encounter many administrative hurdles. Co-employment, or “joint employment,” is one of the most efficient ways to manage legal, immigration and payroll issues in Iraq. A PEO essentially assumes all employment duties and takes over legal responsibility for your employee. 

As local tax specialists, they also ensure total compliance, providing you with tax receipts and all other relevant documents. Additionally, because they are acting as the “employer,” they can sponsor employees for their Work Permit in Iraq. Not only does this mitigate or even eliminate the risks of overseas assignments, it relieves the administrative burdens of overseas work and ensures continuity of service in foreign jurisdictions.

Co-employment services for your Iraq employees

We specialise in the outsourced employment of international assignees. This means our PEO partners in Iraq will:

  • obtain the necessary immigration permissions,
  • take the employee onto their local payroll,
  • process their local tax and social security contributions
  • perform all local statutory compliance.

Send your details for more information

Work Permits for Employees in Iraq

When planning work on a project in Iraq, one of your biggest barriers will be complying with all immigration regulations. In short, your employee will need to be sponsored for a Work Permit in Iraq. Since you may be facing time restraints or unclear information about the necessary immigration processes, it’s crucial to understand the requirements and processes for securing the proper visa or Work Permit.

Sponsorship for your employees in Iraq

A licensed company needs to sponsor your employee for the project’s duration. The sponsoring company will assume legal responsibility for the employee while they are working in Iraq.

If your company isn’t already locally incorporated and licensed to sponsor foreign workers, you might be facing a significant waiting period before you can sponsor a Work Permit. Particularly if you are looking at a set time limit for a specific project, you should explore other options.

The end client can sometimes sponsor a temporary worker, but they will often need to provide payroll for the sponsored employee. This means your customer will be bankrolling your employee, potentially creating even more complications.

How to organise a Work Permit for your employees in Iraq

If an employee is working on the wrong Business visa or temporary entry visa, your client and assignment can be exposed to a swarm of potential legal and financial liabilities.

The most efficient way to guarantee the right Work Permit for your employees is to use a local management company. Well-versed in Iraq’s immigration processes, the management company will take over any responsibilities relating to your employee’s visa. Most importantly, they will sponsor the employee and assume legal responsibility for them during their time in Iraq.

If you are under specific timeframe constraints, they can potentially organise a Business Visa for your employee, and then help them transition to a proper Work Permit once they are already on-site.

Timeframe for getting a Work Permit in Iraq

You can learn specific timeframes for Work Permits in Iraq by reading our FAQ here.

The process for obtaining a Work Permit in Iraq

Go here to find out about the specific process of securing a Work Permit for your employees.

Iraq Work Permit costs and documentation requirements

Read our FAQ to learn about visa costs and the documentation your employees will need to provide. 

Umbrella Company Iraq

Independent contracting in Iraq isn’t straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.

Before you consider taking a contract in Iraq, you should be aware of what you’re getting into – and how you can make it simpler.

Umbrella Company Iraq

Difficulties of contracting in Iraq

Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Iraq.

If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.

Also, are you deeply familiar with the intricacies of the tax system in Iraq, as well as your own country’s laws on overseas earnings? If so, good on you!

However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Iraq and your home country can seem like full-time work in itself.

How Umbrella Companies in Iraq work

Most freelance workers aren’t mystical superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.

They’re called Umbrella Companies (or, contractor management companies).

How do they work?

Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.


Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts.  


Even better, most are experts in Iraq and expat tax law, meaning they’ll also help you optimise your earnings.

Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.

How we help with Umbrella Companies in Iraq

There’s a huge variety of Umbrella Companies out there; they all have different specialties and advantages. How do you find the right one for your circumstances?

We work closely with Umbrella Companies all throughout Iraq and match contractors with the right company for them. If you’ve already secured a contract in Iraq, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free). 

Send your details for more information

Compare Ltd and Umbrella Companies in Iraq

Getting the most out of your new contract will mean figuring out how to comply with all tax and immigration laws, while avoiding as much redundant admin as possible.

The best way to get started on that is to do your research and fully consider your options. One consideration you’ll need to make is comparing Ltd and Umbrella Companies for contracting in Iraq.

Compare Ltd and Umbrella Companies in Iraq

Handling personal arrangements when taking on a contract in Iraq

For a lot of contractors, working in Iraq is a big move. What about accommodation? What about language or cultural barriers? What about simply finding your way around and existing in an unfamiliar environment?

You might even be bringing a spouse or family, leaving you little time to also sort out complicated legal and financial issues.

Contracting taxes in Iraq

One of your biggest issues will be figuring out the tax system in Iraq. Additionally, you may also have some tax liability back home.

Making mistakes can cost you earnings, cause legal trouble, or even result in losing the contract. Even something as basic as a client invoice that includes sales tax is carefully investigated before being considered compliant with all laws and regulations. 

Common problems for UK Ltd Companies in Iraq

As a contractor, you likely already know about service companies. This type of company works through a limited liability personal company. UK contractors with contracts in the UK often use this option.

However, IR35 rules make this more difficult than it once was. For contracting in Iraq, it can be extremely challenging to use a UK Ltd company to handle the contract.

Simply registering for social security and local payroll taxes is a complex operation, which isn't exactly practical for a single contractor. Rather than simplifying your admin, using your own Ltd Company can just spawn even more issues (see our rundown of the advantages and disadvantages here).

Setting up a Ltd Company in Iraq

Another option is to set up a local Ltd Company in Iraq. However, be aware that directors of Ltd Companies in Iraq are subject to a litany of laws and regulations.  

Trying to comply with all of these regulations can seriously distract from your current contract – this can jeopardize your earnings (not to mention your sanity).

Using a Umbrella Company in Iraq

A better option is to work through an Umbrella Company. You’ll essentially be outsourcing the admin and tax issues to specialists.

Perhaps this option’s biggest disadvantage is the fact that the company will charge a fee. However, you’ll likely end up saving more money in the long run: you’ll be able to focus on your contracts, expertly reduce your tax liability, and comply with all laws and regulations (which means avoiding fees, fines, or even worse penalties). When you compare Ltd and Umbrella Companies, the latter generally ends up saving you more in the long run.

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Picking the best Iraqi Umbrella Company

Umbrella Companies ensure your best possible earnings, a regular cash flow, full compliance with all laws and regulations, and extremely low administrative overhead. You might have concluded (astutely) that working with an Umbrella Company is your best bet for any freelance work outside your home country.

Choosing to work through an Umbrella Company is only your first step, though. Your next task is picking the best Umbrella Company in Iraq, according to your own personal situation. Each company has its own standards, fees, services, and specialties. If you’re working with an agency, these considerations become even more complicated.

So what are your options?

How do I find the right Umbrella Company on my own?

The first step is obvious: research.

Which Umbrella Companies offer the most services you’re looking for? Which ones can work with you and your agency? Do the fees outweigh the services?

You’ll need to compare and contrast. This is one of the hardest steps, because there are a lot of variables that are specific to your situation – generally, those won’t be factored into any found information.

After extensive research, you’ll have to contact or meet with your chosen Umbrella Company, which may or may not be represented accurately by its marketing department.

Even if you do your homework and meet with several Umbrella Companies, you could still be unaware of far better options.

How do I find the right Umbrella Company more quickly?

The quickest, most reliable way to find the right company is to seek neutral, third party input.

We’ve worked with numerous Umbrella Companies throughout Iraq and specialise in matching contractors with the most appropriate company. We do this for free.

If you’ve already been offered a contract, or are in the process of negotiating one, get in touch. We can listen to your circumstances, figure out your best options, and provide honest feedback. We’ll match you with the perfect company… and get you started with them, as well!

Essentially, Umbrella Companies lessen the hassle of working freelance in Iraq; we lessen the hassle of picking the right Umbrella Company and getting started!

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Recruitment in Iraq

Recruitment in Iraq: Frequently Asked Questions

What is the monthly cost of using an Umbrella Company in Iraq? 

Between 3-15% depending the service required.


What is the cost of a Work Permit in Iraq?

$600 USD.

How long does it take to get a work permit in Iraq?

1 month.

What is the estimated net retention in Iraq for a contractor earning USD 500 per day?

80% but depends on how the pay is structures.

What is the estimated net retention in Iraq for a contractor earning USD 1000 per day?

80% but depends on how the pay is structures.

Read more about the work permit process.

click here


Recruitment in Iraq can be a challenge, but you don’t have to drown in time-consuming admin just to place a candidate. You can simplify complications by using an Umbrella Company (or “contractor management company”), as long as you pick the right one.

Skip ahead to find out how we can help you place candidates faster, or simply read on to find out more about the specific issues you’ll face.

Placing a new contractor in Iraq: what are the challenges?


Recruiting in Iraq generally requires a lot of complex admin duties, and contractors might end up paying too much in taxes or failing to comply with Iraq tax law. It’s important to know what kind of concerns you’ll be facing.

  • Double taxation: Contractors can incur a tax liability in both their home country and in Iraq. Many countries have agreements that mitigate this type of issue, but whether or not you can take advantage of them will depend on factors like the length of the contractor’s stay, or the laws of the contractor’s home country. You can learn more about double taxation here (note: this info was written with respect to the UK, but the general concepts will still apply).
  • Withholding tax: If a foreign company is used to provide services overseas, the payments made to that company by the Iraq client could be liable for withholding tax under Iraq tax law. Find out more about withholding tax.
  • Individual taxation and tax residency: A contractor’s tax liability will often be determined by his or her residency status in their home country and in Iraq. Figuring out their tax residency can be difficult and is often tied to the length of their stay in Iraq (or out of their home country). Read more about tax residency and individual tax liability here.
  • Permanent establishment: Most double taxation agreements limit the scope of taxation in the host country by providing that a business is only taxable in another state if it has a permanent establishment in that state. A permanent establishment is a fixed base such as a branch, office, factory, workshop, mine or oil well. To find out how to avoid permanent establishment and unnecessary tax liability, read more about the issue.

Work permits

Contractors will need to find a sponsored work permit, which can be difficult and may seriously slow the placement process. Additionally, they’ll need a new permit for each new contract, spawning even more paperwork.

See our FAQ to find out more about the cost and processing time of Iraq work permits.

Why use a contractor management company?

An efficient way to manage these problems is to outsource them to a contractor management company. They’ll act as the contractor’s “employer,” handling all of their invoicing, fees, and social security. As Iraq tax experts, they also help contractors comply with local tax law while maximising the amount they get to keep.

A quicker, better recruitment process: Working with an Umbrella Company means saving time, effort, and resources. Higher earnings and a smoother transition also make contracting a more attractive opportunity, helping you place candidates more quickly and successfully.

Still, you’ll need to find the right company for you and your candidate.

How to find the right Umbrella Company?

Making sense of the optionsFor free, we match contractors with Umbrella Companies and can help dramatically reduce waiting times. There are numerous Umbrella Companies in Iraq and each has its own specialties, services, and payment structures. Choosing the right one is crucial, but it can be difficult when you’re facing a bunch of unfamiliar options.

We’ve developed an extensive database of these companies. We can guide you through your options and help connect you with the best company for you and the contractor.

Get in touch: If you want straightforward, honest advice on recruitment in Iraq, we’re easy to contact. Call, e-mail, or chat with us online - for free.

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Work Permits & Payroll - Frequently Asked Questions


What documentation is required for a Iraq work permit?

Passport, 2 passport photos, certified copies of education certificates, employment contract, police clearance certificate (dependent on nationality).

What is the work permit process in Iraq?

Local organisation makes the application in Iraq, once approved locally candidate must make an application at the Iraqi Consulate in their home country.

Can you transfer from a Business Visa to a Work Permit in Iraq?


Can we organise Business Visas in Iraq?


How long does it take to process a Business Visa in Iraq?

7 to 10 days.

How much does a Business Visa cost in Iraq?

 $300 USD.

Can nationals of certain countries enter Iraq without a Business Visa (ex. on an entry visa or visa waiver)?


$3000 USD.

What is the monthly cost to run a local payroll in Iraq?

 Between 3-15% depending the service required.

How does payroll work in Iraq?

Tax and social security deducted at source by a local company and paid to the local tax authorities.



Contractor Payroll in Iraq

Positioning a candidate internationally means navigating unfamiliar tax and payroll systems. Not only does this generally mean more work for you, but even small missteps can have serious financial or even legal consequences.

If you want to successfully place a contractor, you should first familiarize yourself with the contractor payroll process in Iraq, as well as how you can make the situation simpler.

Contractor Payroll in Iraq

Payroll options in Iraq

There are several different options for payroll in Iraq:

  • The client can provide payroll for the contractor, but not all clients offer this for temporary workers.  
  • The contractor can do it on their own, but this creates serious risk for the end client and possibly your agency, as well. Like most people, many contractors do not specialise in Iraq’s tax system, nor do they always have the time or means to pore over complex tax returns.
  • Your contractor can use a local payroll company.

The third option is the simplest and quickest. An even simpler and quicker option is to use an Umbrella Company, as they offer the same services as a local payroll provider in addition to other services that simplify international assignments (such as Work Permit sponsorship).

Check out our FAQ for specific quotes on payroll providers and Umbrella Companies. 

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Iraq Contractor Payroll Services

When trying to place candidates for international assignments, there are numerous administrative barriers and time-consuming hold-ups.

You cut through many of these concerns by using an Umbrella Company, or “contractor management company.” These companies sponsor contractors for Work Permits, assume legal responsibility for them, and provide payroll and tax services. They are essentially an intermediary that manages all employment and administrative tasks for contractors.

Work Permits in Iraq

Your candidate will need a sponsored Work Permit, and they’ll often need it quickly. Since Umbrella Companies operate as the “employer,” they can sponsor Work Permits as if the contractor were a full-time employee.

They can also organise Business Visas for candidates, helping them get on-site faster. Then, they can transition the contractor onto the appropriate Work Permit, eliminating financial or legal risk for your end client.

Taxation in Iraq

Umbrella Companies can provide specialist advice on taxes in Iraq, ensuring that contractors comply with all local regulations. Their services guarantee local compliance and reduce the legal risk for your client and your agency.

Additionally, their specialisation helps maximise contractors’ earnings, making the assignment more attractive for your candidates.

Get started with an Umbrella Company in Iraq

Different Umbrella Companies offer different services and charge different fees, so you’ll need to find the right one for your assignment.

Luckily, we’ve done all the research for you. We have a large database of Umbrella Companies and have worked extensively with our partners. Let us know your circumstance and we can match your candidate with the right company.

We do this for free, and we do it quickly. Call or chat with us, or simply send us your details. 

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Payroll Companies in Iraq

We have a very established partner company in Iraq who can run payroll for expatriate and local contractors. It is particularly important in Iraq to use a trustworthy company because of the attention payments into and out of Iraq attract from banks and financial regulation authorities. We had a number of false starts trying to find a reliable partner. It is a challenging and fluid country to say the least. We are happy to say that we have now found the best Iraqi payroll company.

Our Iraqi payroll provider has a full service range:
- They can handle in-country invoicing, tax calculation & filing, payment in country and outside of Iraq.
- They can assist companies with establishing a local legal entity in Iraq and handle all the administration and compliance for this entity.
- They provide full medical and medivac insurance.
- Lastly they can also sponsor foreign workers for Iqama / Iraqi Work Permits and second them on to client sites anywhere in Iraq. This includes the Kurdistan region, Bahgdad and Basrah.

Management fees vary from 4-15% of payroll depending on the level of service required.

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Iraqi Contractor Management Companies

Despite the financial crunch, the IT recruitment market in Iraq has remained resilient. In order to attract expert contractors, recruitment companies are offering slightly higher rates. Recruitment companies are constantly seeking ways to offer higher value contracts without any additional cost to them. With the considerable contractor management complications in Iraq, many contractors are reluctant to take a contract in the country. Add complex international tax rules to the stress of a new contract and contractors need some incentive in order to take a contract.

We provide contractors and agencies a solution to complicated contract management. One of our specialities is contractor management services in Iraq. We start by consulting with a contractor about their situation and needs. We then match them with the right Iraqi contractor management companies. We find umbrella companies that take the burden of fiscal and regulatory compliance issues off the contractor. The end result is the contractor being able to focus on the client, which also benefits the recruitment company. A happy client is always the ultimate goal. We are not affiliated with any recruitment companies, umbrella companies or clients, allowing us to provide unbiased, expert advice on the best umbrella companies in Iraq.

Iraqi Contractor Management Companies

Contractor Management Services in Iraq

In addition to typical administration tasks, Iraq contractor management companies even sponsor work permits. Without an umbrella company, the contractor would be responsible for handling recruitment agency invoicing, social security levies, tax deductions and other fees. The company even provides documentation such as tax certificates and payslips for record keeping. Ultimately, taxes are minimised due to the company's tax experts. Should tax withholding become a problem, the contractor management company will invoice the client directly and pay a commission to the recruiter. As a contractor, the only thing you are responsible for is sending in a timesheet and an expense report. As soon as the agency releases funds to the contractor management company, the contractor receives their portion. Fast turn around of cash keeps both recruiters and contractors happy.

Umbrella Company Benefits for Recruitment Agencies

We have in-depth knowledge of the best umbrella companies and contractor management in Iraq. We focus on the needs of the contractor, learning about their personal goals and circumstances. The better we understand the contractor, the better matches we can find for them. Our experts save contractors valuable research time so they can focus on other preparations. We provide our service completely free to the contractor. Our pay comes from a commission from the contractor's umbrella company in Iraq of choice; however, the contractor always makes the final choice. Our goal is to make the contractor comfortable and reduce overall contract stress.

Recruitment agencies exist to recruit the right contractors for available contracts, while providing clients with multiple options for their contracts. Once a client has made a decision, we work with the contractor to provide advice. In some circumstances should an agency request it, we will help immediately before a decision is made should a leading candidate have reservations due to the complex administration when contracting in Iraq.

The recruitment company pays nothing when we work with their contractors. Our advice is extremely valuable to contractors, especially the time saving aspect. It also adds value to the services recruitment companies offer. Both parties benefit and neither pay anything.

While the IT sector is booming, we offer advice on umbrella companies in many high demand industries such as telecommunications, engineering, oil and gas and finance. Contractors and recruiters can rely on our second to none expert knowledge of contractor management companies in Iraq.

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Q&A For Recruiters Placing Contractors In Iraq



We have the most recent costs listed here. Be aware that costs can vary according to the nationality of applicant and factors such as whether they have any dependents. They are largely comprised of government fees, which are also liable to change. It is best to contact us and get you an up to date and accurate cost on Iraq work permits for your particular contractors.

Can we provide business visas in Iraq?

Find out here (the short answer is yes)! The long answer is that it depends on the nationality of the contractor, what they will be doing, and what happens after the business visa runs out. e.g. will you be planning to finish the assignment, extend the business visa, or transfer to a work permit?

Can an individual transfer from a Iraq Business Visa to a Iraq work permit whilst still in country? If they have to leave, do they have to go back to their country of origin or just clear the border?

See the answer here. Note we’ll need to check your case with our local partner to be sure. It can be influenced by the individual’s country of origin and the nature of work they will perform. Generally, if you aren’t able to transfer in country, you need to return to your country of origin.

Can we provide local payroll in Iraq?

Yes, our local partner can run a full local payroll. This includes receiving funds from another local company or a foreign entity, deducting local taxes & social costs, reporting same to the relevant government department and supplying payslips. They can make payment within 24 hours of receiving cleared funds. Go here for further details of how payroll works in Iraq.

What level of local payroll is required when contracting in Iraq?

This depends on what job title and visa status the contractor holds. We ensure that the level of salary is sufficient to meet all regulatory requirements. We have listed the minimum salary for a candidate to get sponsored for a work permit.

What are the tax and social security costs in Iraq?

You can have a look at this page.

What is the total onboarding cost for outsourced employment in Iraq?

Unfortunately, we aren’t able to publish figures online because the costs vary according to the circumstances. You can see the management fees here, but there may be other costs like Employers Social Security, Payroll Tax or Withholding Tax. We have a number of local partners who can provide employment outsourcing in Iraq, so you’re assured to get the most competitive price. If you’d like a quote please contact us.

Are there additional taxes that apply in Iraq such as Value Added Tax (VAT), Goods and Services Tax (GST) or Withholding Tax (WHT)?

This can be influenced by which country your company is incorporated in, as well as the tax laws of Iraq. Sometimes the nature of the work or services provided can also influence whether with-holding tax applies. If you can share some details with us, we can confirm with our local experts.

Are there any foreign nationalities which are problematic when getting visas and permits in Iraq?

There are some nationalities who receive extra scrutiny in Iraq, meaning their applications will take longer and require additional documentation or checks. This is often due to political reasons and can change accordingly. It’s not prudent to say that any nationalities are “out of favour.” Our partners in Iraq haven’t recently experienced problems with citizens of the EU, USA, Canada or Australia. For all other nationalities, it’s best to check the current climate.

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Letting your Contractors use their UK Ltd Company in Iraq

This explains the implications for your agency and company if your contractors in Iraq are using their personal Ltd Company. It assumes that you’re dealing with a UK Contractor who has a personal UK Ltd Company which they want to use. Many of the issues are the same for personal service companies registered in other countries (except Iraq).



What are the agencies' responsibilities?

Your contract with your client will probably mean your agency bears responsibility to ensure that the contractor is legally working in Iraq (i.e. that they are compliant with all relevant local employment, taxation and immigration requirements). The client will hold your agency accountable if this isn’t the case. This could mean you just lose their business or (in the worst case) they may commence action to recover fines or penalties which they incur if the contractor isn’t compliant.

How do you alleviate the risk?

If you are a UK recruitment agency, you will already be familiar with the basic steps you take when placing a new contractor. You need to get copies of their company incorporation certificate and VAT registration certificate. You should also get proof of individual’s identity (such as scanned passport or driver’s license) and potentially their National Insurance number. This ensures you have verified their identity and company registration. Not only is this common sense, it’s also one of the requirements of money laundering legislation.

For foreign assignments, it’s recommended to take a couple of further steps by checking that the Ltd company has been registered for tax and VAT / sales tax in Iraq and also that the contractor has registered with the local taxation system for tax and social security. In some circumstances, the contractor may be able to continue paying social contributions in the UK by supplying a form to the tax authorities in Iraq.

Obviously it may take time for the contractor to complete these registrations but, if you pay their UK Ltd company without confirming they are registered for Iraq tax, it exposes your agency and client.

What can go wrong?

It’s unlikely that the tax or employment authorities in Iraq will investigate your agency directly, but your client is open to inspection by their internal compliance officers, external audits which they may undertake, as well as those direct with the local authorities. Unfortunately, UK Ltd companies get a bit of extra scrutiny at home (and with many foreign jurisdictions) because of some well-publicised cases of abuse. Don’t forget your contractor will be subject to immigration scrutiny each time they cross the border.

Lastly, the UK HMRC may rule the contractor is still liable to UK tax and national insurance. This raises the possibility of IR35 and its counterpart in Iraq.

What are the potential risks to your agency?

The most common danger is damaging the relationship with your client and contractor, although the risk to your agency’s reputation shouldn’t be understated. If the client is investigated or fined because the contractor was on site illegally or wasn’t tax registered, then there may also be significant financial penalties for the client which are passed onto the agency through the indemnity clauses in your contract. You should pass these same indemnity clauses on to your contractor’s limited company – but their personal liability is somewhat shielded by the limited company setup.

What is the risk to the client?

The client has to ensure that any workers on its premises have the legal right to work in Iraq and that any employees or contractors that it uses comply with local tax regulations. If your contractor is found to be liable for local tax but hasn’t registered or paid it, then the authorities may seek to recover funds through the client.

In the worst case scenario, the authorities may rule that your contractor was effectively an employee of the client and the client will be liable for income tax deductions and employers’ social contributions. If the contractor is stopped at the border and doesn’t have the right work permission, they will be deported or refused entry. This poses an immediate problem to the client if their work contribution cannot be easily replaced.

However, if they’re caught on site without a work permit, the employer can be hit with a range of penalties including substantial fines. It may also limit their ability to employ foreign nationals in the future.

What is the risk to the contractor?

If your contractor doesn’t have the right immigration permission, they may be refused entry or deported. If they aren’t paying tax or contributing to national insurance or social security in Iraq, there is potential for fines and worse if the avoidance is ruled deliberate. VAT or sales tax is another liability which they may neglect. If they are collecting tax but not paying it to the authorities the penalties are very serious indeed.

What else can you do?

If the contractor can show full compliance with their UK Ltd company (i.e. they are registered with all the relevant authorities in Iraq before the contract is signed), then you may feel comfortable enough to proceed. If you want to be fully assured that everything is above board, then utilise a specialist contractor management company who run a local payroll in Iraq. This doesn’t stop your contractor from maximising their net income, but it does ensure that they are registered for (and paying) all local taxes and social contributions. The best umbrella companies can also arrange sponsorship for contractors, if necessary, so they are legally entitled to work in Iraq.

Talk to us for more advice

If you would like more advice on placing your contractor into Iraq, please talk to us. We can get you the information you need and help you find the most appropriate solution. We’re partners with a multitude of Iraq contractor management companies, and we’ll check with them to ensure you receive accurate information. We also have a detailed knowledge of their offerings, and we can find you a company which will payroll your contractor legally. They will also supply the supporting documentation to reassure your client that the contractor is properly registered and compliant. Our advice is completely free, and there is no obligation.

Get in touch with us today and see what we can do for you!

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Case Studies

Study 1 - The Client:

A Dutch company was bidding for a construction project in Iraq, as part of the bid process they had to provide the name of the company that would sponsor their staff on Iraq Work Permits/Visas for the duration of the project. They looked into sponsoring their staff directly and then tried to find local companies they could partner with, both to no avail. They then came across and we were able, along with our locally based partner company, to provide Iraq sponsorship and local Iraq pay-rolling for all of their staff. They then added these details to their bid. They duly won the bid and we now sponsor 40 of their staff on local Iraq Permits.

Iraq Contractor Management

Study 2 – Contractor:

A London based recruitment agent, Stephen, had been given a job spec for a contractor to work in Iraq. The contractor was a German national and would require both Work Permit sponsorship and local pay-rolling for the duration of his contract in Baghdad. Stephen, having dealt with Contractor Taxation for a number of international contract assignments contacted us immediately. We were able to provide him with costs and timeframes for Work Permit sponsorship and he was able to get back to his client immediately with a solution. With our local partner we now sponsor several of Stephen’s Iraq (and Middle East) based contractors on local Work Permits and provide local Iraq payroll.

Iraq Freelance

General Information

Capital : Baghdad

Major Cities : Basra, Al Hillah, Arbil

Official Language : Arabic

Time Zone : GMT+3 World Time Clock

Currency : Iraqi Dinar Free Currency Calculator

Population : 29,671,605 (February 2010 est.)

Median Age : 20.6 years

Growth Rate : 2.449%

Net migration rate : 0/1000 population

Life expectancy at birth : 70.25 years

GDP per capita : US$ 3,600

Jobs & Employment

Iraq has a growing contract job market with great opportunities for skilled, qualified expatriates. The feedback we get from recruiters is that Information Technology (IT), Banking & Financial Services, Engineering, Telecommunications and Energy are the areas most in demand. Here is our list of contractor employment sites and resources for Iraq. If you think a site should be listed here, please ask us to add a job site to our list.

Iraq Freelance


Iraq Contractor Work Permit

Services Summary

We feel we have a comprehensive range of services in Iraq to cover most of your needs. If you would like some assistance and don't see it here please Contact Us

Iraq Contractor Iqama

A summary of our most popular Iraq services:

Tax, Invoicing, Payroll and Employment Financial Management Structures You can reach all our resources for Iraq from this page.



- A summary of all Iraq SERVICES that we offer


- Information on Contract Jobs & Employment in Iraq

- Information about Iraq

Iraq Work Permit

Contact us about Iraq

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Tax Residency for UK Expats in Iraq


Understanding tax obligations is one of the biggest challenges for UK expats working in Iraq. Your UK residency will play an enormous role in what kind of taxes you owe, how you file, and your net income.

Find out how to determine both your current and preferred residency, as well as advice on capital gains tax, owning UK property while you are in Iraq, and more. You can also contact us if you would like to speak to a professional about your specific circumstances.

Non-Resident for UK Tax

UK tax residents will need to pay UK tax on their worldwide income, although this amount is subject to relief based on foreign tax paid. Non-residents are taxed at the same rates as residents, but only on income sourced in the UK – this means you can avoid the extra hassle of securing relief for the foreign taxes you’ve already paid.

Aside from needing to comply with tax law in Iraq (more on that here), you might still need to submit a UK tax return. Since there are several variables that can affect your earnings, it will be important to understand your non-resident status and how it can affect how much you owe (or don’t owe) in both the UK and Iraq. Head here for more info.


When do I become non-resident of UK?

When you leave the UK to work full-time in Iraq, you generally become non-resident the day after you depart the UK. However, certain conditions must still be met:

  • The employment contract must be for at least one year.
  • You need to have left the UK to commence employment, rather than for recreational travelling or holiday. 
  • You must be absent from the UK for an entire year; if you visit the UK, these visits cannot total 183 days or more (and need to average less than 91 days per year throughout your time of absence up to the first four years).

If you’re leaving to work in Iraq, you could potentially be resident for one part of the year, and non-resident for the other – this is “split year treatment” (jump here for more info on split year treatment).


How to become a UK non-resident

In general, you’re automatically considered non-resident if you leave the UK to work full-time in another country, spend less than 16 days inside the UK, or were non-resident for the previous three tax years.

If you aren’t a UK resident based on those tests, then a “sufficient ties” test might be used to establish residency instead. This is an evaluation of the ties you have to the UK, namely:

  • Family tie
  • Accommodation tie
  • Work tie
  • 90-day tie
  • Country tie (this considers whether the UK was the country where you’ve spent the largest number of days)

You should look to reduce as many of these ties as possible if you want to establish non-resident status.


UK non-resident income taxes

If you’re considered non-resident, you’ll only need to pay tax on income originating in the UK. However, this can include capital gains, or you may be subject to tax on UK income while you were resident.


Filing a UK non-resident tax return from Iraq

You might not need to file a tax return if you’re only earning investment income from the UK, such as interest or dividends. Conversely, you will need to file a return and declare any UK earnings if they’re from self-employment, directors’ fees, partnership profits, or a bonus that accompanies work performed in the UK before you become non-resident.

Further, non-residents might potentially need to declare income from renting property in the UK if tax hasn’t been deducted under the Non-Resident Landlord Scheme (read more about that here).

When in doubt, it’s safest to submit a tax return to ensure that you’ve claimed all necessary expenses or allowances.


Double taxation agreements with the UK and Iraq

The UK is part of over a hundred double taxation agreements, or DTAs, with various countries. Among other purposes, these agreements help ensure that individuals who are resident in one country and working in another aren’t subject to taxed doubly on one source of income. 

For non-residents who are still earning UK income, you can claim relief under one of these DTAs by submitting a double taxation claim form. The form will need to be certified by the relevant authorities in Iraq to affirm that you are a resident.


Non-Resident Landlord Scheme

As an expat in Iraq, you might still rent out land or property in the UK despite being out of the country. The Non-Resident Landlord Scheme applies to individuals who own rental property in the UK, but whose regular home is in another country. It requires that the basic tax rate is deducted from the rental income before it’s passed to you, the landlord.

If you’re a non-resident, you may be eligible to receive your rental income without tax being deducted. You will need to apply with the HMRC to determine eligibility. You can apply at any time (including before you have departed the UK, or before you have begun the rental period).


Capital gains tax for UK non-residents

Non-residents are not usually liable for tax on capital gains in the UK. Nonetheless, you may owe tax on capital gains even as a non-resident if the assets are held in order to perform work through an agency or branch in the UK.

You may also owe tax on capital gains that arise during “temporary of non-residence.” A simplified definition of this term is “a period of non-residency for five years or less.” You can learn more about capital gains tax as a non-resident, temporary non-residence, and selling assets while working in Iraq by clicking here.


Pensions and national insurance contributions for UK non-residents in Iraq

If you do not make national insurance contributions while you are working in Iraq, you risk losing full entitlement to state pension upon retirement. However, you can potentially keep making contributions throughout your employment contract abroad.

Your ability to do this will depend on the terms of your contract in Iraq, as well as the specific provisions of the pension scheme. For UK state pension, expats can make voluntary national insurance contributions to preserve their pension rates.

To be eligible to make these contributions, you will need to have lived in the UK for a continuous three year period, or have paid contributions for three or more years prior to going abroad.


UK Property and Non-Residency

Non-residents aren’t typically subject to capital gains tax (even if the individual is selling an asset located within the UK). However, there are some important exceptions to this.

As mentioned in our section on capital gains, you might still be liable for assets sold during “temporary non-residence,” which is a period of non-residence under five years. Learn more about temporary non-residence here.

You may also be subject to CGT if you sell or dispose of assets in the UK that were held in the course of work for a UK agency or branch.

If you’re selling or disposing of property in the UK that served as your main residence, it may be exempt from CGT. The property will need to meet certain criteria to be considered your “main dwelling” and your exemption will also depend on other factors, such as when you moved into the residence after acquiring it.

Selling property in the UK while you’re a non-resident working in Iraq can sometimes involve a multitude of factors, so make sure to contact us if you’d like to speak to a professional.


Residency Tests: Are you a non-resident or resident?

There are a number of tests that apply to determine your tax residency status.

However, because your country of domicile can play a large role in determining your residency, it’s also important to establish where you are domiciled.

Definition of domicile

The country in which you maintain your permanent, or “real,” home is your country of domicile. You can only have one country of domicile.

In broad terms, your domicile is where you intend to return. If you are living and working in Iraq, but have no intention to remain there permanently, then generally it won’t be considered your domicile.

Types of domicile

  • Domicile of origin: In many cases, this type of domicile can be thought of as the “default” domicile; it’s usually a person’s main domicile until a new one is acquired. It’s the domicile you have at birth, and is often the country your father considered his real or permanent home (or, in some cases, the country your mother considered her real or permanent home).
  • Domicile of dependence: If an individual (usually a child) is legally dependant on another person, then he or she typically assumes the domicile of that person.
  • Domicile of choice: In the UK, a person who is at least 16 years of age can choose his or her own domicile. In other words, you could choose Iraq as your domicile. However, a person would have to provide sufficient evidence to prove a new domicile for tax purposes.

Residency in Iraq versus domicile in UK

It is possible to be have tax residency in Iraq while being domiciled in the UK. In fact, for many expats in Iraq, the UK will still be their country of domicile despite being a non-resident for tax purposes. Read more about residency and domicile.


Non-domicile tax

If you’re a UK resident, but domiciled in Iraq, you will have to pay tax on income arising from the UK. However, for income and gains acquired in Iraq, you can be taxed on a remittance basis.


UK Tax Residency Tests Explained

The statutory residence test determines whether an individual will be considered UK resident for the tax year. There are several stages of this, which are comprised of automatic tests: 

  • The First Automatic UK Test (183 day rule): Whether the individual is inside the UK for 183 days or more (for that tax year)
  • The Three Automatic Overseas Tests
  • The Second Automatic UK Test: If the individual has a home in the UK for all (or part of) the tax year
  • The Third Automatic UK Test: Whether the individual works full time in the UK for 365 days (with no sizable break)
  • The Sufficient Ties Test

Keep reading to learn more about each of the tests, or check out a more detailed break-down of them here.


The 183 Day Rule: The First Automatic UK Test

If you were present in the UK for more than 183 days, then you are were UK resident for tax purposes and don’t need to continue on to the other tests. If not (say, if you were living and working in Iraq for 183 days or more), then you will still need to meet one of the three automatic overseas tests.

In other words, being out of the UK for 183 days is necessary, but not sufficient, to be considered non-resident.

The Three Automatic Overseas Tests

First Automatic Overseas Test
  1. Have you been inside the UK for at least one of the previous tax years?
  2. During this tax year, have you spent fewer than sixteen days in the UK?

If you can answer “yes” to both questions, then you are non-resident.

Second Automatic Overseas Test
  1. Were you non-resident in the UK for the last three consecutive tax years?
  2. This tax year, have you spent less than 46 days inside the UK?

If “yes” to both, you’re a non-resident for UK tax.

Third Automatic Overseas Test
  1. Did you work abroad, full time, during the tax year? (Click here to clarify whether or not you’re considered to be working “full time.”)
  2. Were you in the UK for less than 91 days in the tax year?
  3. Did you work less than 31 days in the UK?

If “yes” to all three, then you’re a non-resident for UK tax.

If you haven’t met any of the three overseas tests, you’ll need to move on to the second and third Automatic UK Tests.


The Second and Third Automatic UK Tests

Do you currently have a home in the UK, or have you previously? If so, the Second Automatic Test will apply to you.

The Second Automatic UK Test
  1. Have you had a home in the UK for 30 consecutive days of the tax year?
  2. Were you present in this home for at least 30 days of the tax year?
  3. Did you have the home for 91 consecutive days or more, in total?
  4. Did you have no home overseas OR a home abroad where you spent less than 30 days of the relevant tax year?

If your answer is “yes” for all three questions, then you’re tax resident in the UK.

The Third Automatic UK Test
  1. Did you work in the UK for a 365 period where said period falls within the tax year in question?
  2. Of those work days, were at least 75% spent working in the UK?

If “yes” to both of the above, then you have met this test. If not, you will need to progress to the Sufficient Ties Test.


The Sufficient Ties Test

If you’re not resident in any of the three preceding tax years, and you do not satisfy the Automatic UK Tests, nor the Automatic Overseas Tests, then a “sufficient ties test” is used to determine tax residency.

We touched upon sufficient ties in our section on becoming non-resident. Sufficient ties are:

  • Family ties: Was your partner or child under 18 considered tax resident in the UK?
  • Accommodation ties: Did you have a place to live in the UK that was available to you for 90 or more days? AND did you spend one or more nights there?
  • Work ties: Did you work 40 days in the UK, for three or more hours a day in the tax year?
  • The 90 day tie: Did you spend 90 or more days in the UK in either of the previous tax years?

Even if you’ve spent fewer than 183 days inside the UK, if you have one or more “sufficient ties,” you may still be considered resident.

Go here for more in-depth information on the Sufficient Ties Test.


What is split year treatment for UK expats in Iraq?

When you’re considered resident in the UK for a tax year, you’re usually taxed for the entire year as a resident. Nonetheless, you might be eligible for split year treatment. 

If you’re working in Iraq for part of a tax year, you might only be taxed as a UK resident for the portion of the year when you were working in the UK. 

Split year treatment can occur within “8 Cases.” To learn more about what these situations are and how to work out which rules apply to what circumstances, click here.


How can I check my residency status?

The HMRC website has a tool called the “Tax Residency Indicator,” which lets you check your tax residency status. You need to register online with HMRC, and the tool is not always available because only a limited amount of users can access it at one time.

HMRC also provides a flowchart that can take you through the steps of the Statutory Residence Test.


Tax Residency Certificates

You can only take advantage of the rates of many double tax treaties when you’re a resident of one of the countries involved in the agreement; therefore, you may need to prove your UK resident status to the authorities in Iraq by providing evidence of your entitlement to benefits under the treaty.

To provide evidence, you may need to obtain a tax residency certificate issued by the HMRC.


The HMRC and UK Residency

You must inform HMRC, using form P85, of the date when you depart the UK and how long you intend to stay in Iraq. This will help ensure that you will be able to claim any appropriate reliefs. It will also help the HMRC make any necessary changes to your records in the PAYE system to avoid double taxation.

If you’re contacted by the HMRC, the safest route is to first seek professional help to clarify your rights, as well as the rights of the HMRC to request information. Read more about the HMRC, form P85, what they’re looking for, and how to deal with contact from them.