Dear Readers,
It is a pleasure to welcome you to our quarterly Iraq Business Newsletter. As the AHK Iraq – Deutsches Wirtschaftsbüro Irak, we are committed to providing you with sector-specific insights and updates about ongoing and future projects in an evolving market.
Iraq offers significant potential for German businesses across various industries, from energy and infrastructure to manufacturing and technology. With this newsletter, we aim to keep you informed about key economic developments, business trends, and upcoming events, while offering practical guidance for companies looking to engage with the Iraqi market.
We invite you to stay connected, explore new opportunities, and to join our network. Your feedback and engagement are always welcome.
We look forward to meeting you!
Dr. Martin Henkelmann
Delegate
I. Iraq Market Insights & Economic Outlook
Iraq's economy continues to show resilience. However, growth is expected to remain moderate due to the persistence of oil production constraints and fiscal pressures.
1. Economic Performance
Iraq’s economy is expected to grow by 4.1 % in 2025, according to the International Monetary Fund (IMF), placing it fourth among Arab oil producers.
This projection suggests a potential rebound after a turbulent 2024, when overall GDP contracted by 2.3 % due to oil production cuts and political disputes with the Kurdistan region.
The IMF’s Article IV consultation also highlighted a sharp slowdown in non-oil GDP growth, which fell to 2.5 % in 2024 after experiencing double-digit growth in 2023, underscoring the challenges Iraq faces in diversifying its economy.
On the macroeconomic front, inflation eased to 2.7 %, signaling improved price stability. However, the fiscal deficit widened to 4.2 % of GDP, reflecting continued pressure on public finances. (Source: IMF, iraqinews.com)
Other institutions offer more cautious forecasts:
- The World Bank expects only 1.2 % growth in 2025, followed by a stronger 4.4 % in 2026 and 3.1 % in 2027, after a –1.5 % contraction in 2024.
- Fitch Solutions revised its 2025 forecast upward from 1.5 % to 1.9 %, citing higher OPEC+ production quotas. However, it warned that lower oil prices and election-related spending will likely keep the budget deficit elevated.
These forecasts collectively highlight Iraq’s continued reliance on oil revenues and the urgent need for economic diversification to ensure sustainable growth.
2. Policy Direction - Navigating Oil Dependency
Iraq’s 2024–2028 development plan sets ambitious targets to reshape the country’s economic landscape. Key goals include:
- Reducing unemployment from 13 % to 10 %
- Achieving an average annual GDP growth of 4 %
- Lowering the poverty rate to below 15 %
- Reducing the oil sector’s share of GDP by 25 %
The plan outlines revenues of approximately 710 trillion IQD (≈US$540 billion) and investment spending of 241 trillion IQD, with a strong focus on infrastructure development and private sector participation.
Work is steadily advancing on the Al-Faw Grand Port, a landmark infrastructure initiative. The connecting road is now 97% complete, representing a major achievement. The project is estimated to cost US$7 billion, with the first phase scheduled to be operational by 2028. (Source: Iraq Prime Minister Office)
3. From Berlin to Baghdad - Export Trends to Watch
German exports to Iraq saw a substantial increase from January to July 2025, reaching a total volume of €833.5 million, a 17.7 % rise compared to the same period in 2024 (€708.2 million). This positions Iraq as one of the most dynamic sales markets for German companies in the Middle East. Several sectors showed particularly strong performance:
- Electrical machinery and equipment: +77.6 %
- Pharmaceuticals: +49.7 %
- Road vehicles: +32 %
Mechanical engineering also expanded its market share.
These gains reflect Iraq’s growing demand for modern technology, vehicles, and healthcare products, driven by infrastructure development and rising consumer needs.
This momentum presents strategic opportunities for German companies to further expand their presence, especially in infrastructure, industrial development, and healthcare, where demand for high-quality German technology continues to grow.
German Export Figures to Iraq by Product Group (January–July)
(Source: Eurostat)
4. Iraq - Emerging Opportunities in Project Development
With a project volume of USD 422 billion (as of June 2025), Iraq ranks among the largest project markets in the Middle East. Of this, approximately USD 105 billion is currently under implementation, with an additional USD 149 billion in the design phase. The most significant focus areas include:
- Construction: USD 120 billion
- Oil sector: USD 98 billion
- Energy projects: Electricity (USD 95 billion), Gas (USD 39 billion)
While oil and gas remain central to Iraq’s investment landscape, renewable energy, infrastructure, and urban development are gaining increasing importance, reflecting a shift toward diversification and modernization.
Project Volume in Iraq by Sector (as of June 2025)
(Source: Meed)
5. Legal Focus - Corporate Tax and Double Taxation
Iraq’s legal system has undergone incremental reforms, yet ambiguity and overlapping regulations continue to pose challenges for investors. While corporate tax rules are relatively straightforward, Iraq is actively expanding its network of double taxation treaties (DTTs) to improve legal certainty for cross-border business.
a. Corporate Taxation
- Flat 15 % corporate income tax applies to Iraq-incorporated entities and foreign branches.
- The General Commission for Taxes may apply either a deemed tax on turnover or a 15 % tax on net profits, depending on the taxpayer’s circumstances.
- Companies in the oil and gas sector are taxed at 35% on profits and may face additional charges.
- No separate dividend tax is imposed.
(Source: taxsummaries.pwc.com)
b. Double Taxation Agreements & Developments
Oman–Iraq Agreement (September 2025): Signed in Muscat to avoid double taxation and prevent tax evasion on income and capital. The agreement also includes mutual visa exemptions and 24 MoU across energy, tourism, finance, education, and defense. (Source: muscatdaily.com)
c. Implications for Foreign Investors
While Iraq currently has few DTTs in force, recent agreements signal a growing commitment to legal certainty for international business.
German companies operating through Iraqi branches are subject to a 15 % corporate income tax and should closely monitor DTT developments to assess potential relief from double taxation.
II. Relevant Policy & Regulatory Updates
1. Iraq Introduces a New Procedural Step for Imports and Customs on September 12, 2025
The Iraqi Council of Ministers implemented a phased reform to streamline import procedures and enhance the efficiency of customs duty collection, including the mandatory use of pre-customs declarations for financial transfers and clearance processes.
Beginning November 1, 2025, as part of Iraq’s updated import procedures, German exporters must ensure that their commercial invoices include the following mandatory details to comply with customs documentation standards:
- Invoice date and number
- Payment and shipping terms
- Invoice value and currency
- HS code (minimum six digits)
- Full addresses of both importer and exporter
- Accurate description of goods
- Country of origin and brand name
- Quantity and unit of measurement
- Unit price and total price
Either the final commercial invoice or a proforma invoice accompanied by the sales contract may be accepted, provided that the final invoice includes all the details listed in the proforma.
Starting December 1, 2025 (operational phase), a Pre-Customs Declaration becomes a mandatory requirement for financial transfers and customs clearance of imported goods, commodities, and related services.
This phased implementation is designed to standardize import procedures and support automation at border crossings and customs offices—ultimately helping to reduce delays and streamline the clearance process. (Source: Embassy of the Republic of Iraq (Berlin), Commercial Attaché, Notice No. 371, Sept 12, 2025)
Imports and Customs update
2. Central Bank of Iraq publishes New Guide to ESG Standards on August 4, 2025
The Central Bank of Iraq (CBI) has released a comprehensive "Guide to Environmental, Social and Governance (ESG) Standards for Banks 2025". The guide is part of the CBI's sustainable‑finance roadmap (2023‑2029) and aims to align Iraqi banks with international best practices. Below is an English overview of the key points from the Arabic document. Key elements of the ESG guide:
- Purpose and scope – The CBI plays a central role in Iraq's growth and financial stability. The ESG guide is mandatory for all banks licensed by the CBI, aiming to ensure that banks' environmental, social, and governance performance aligns with the CBI's vision for a sustainable banking system and meets global expectations.
- International benchmarks – The guide draws on standards from the International Finance Corporation (IFC), OECD, Basel Committee on Banking Supervision (BCBS), the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB), and the International Sustainability Standards Board (ISSB).
- Seven‑part structure – It covers: The overall framework and ESG oversight; Board of directors (composition, qualifications, independence, duties, and meetings); Sharia Supervisory Board Requirements for Islamic Banks; Board committees (including a dedicated ESG and sustainability committee); Executive management and its committees; Internal audit, transparency, and disclosure (including relations with external auditors, risk management, and compliance); Governance of stakeholder and climate‑related issues with guidance on ESG reporting.
- Board responsibilities – The board must collectively provide ethical leadership and oversight, approve the bank's ESG framework, embed ESG values into policies and controls, adopt a code of conduct and conflict‑of‑interest policy, ensure annual performance evaluations, and regularly incorporate ESG matters into its agenda.
- Risk management and investor expectations – The CBI emphasizes that the growing demand for sustainable financial products and regulatory pressure necessitate that banks integrate ESG risks, particularly those related to climate change, into their risk-management systems. Investors are more likely to work with banks demonstrating robust ESG policies and governance.
- Stakeholder protection – A core objective is to protect depositors, shareholders, and other stakeholders by ensuring that boards and executives oversee bank operations responsibly and transparently.
This guide signals Iraq's commitment to adopting global ESG standards. It provides German banks and investors with a more transparent, internationally compatible framework for evaluating and collaborating with Iraqi financial institutions.
(Source: Iraq Business News)
III. Tenders
The Iraqi government is making large-scale investments in infrastructure, energy, and further industrial sectors to foster economic diversification. As part of this, public tenders and projects are frequently announced, presenting opportunities for international businesses to engage in Iraq’s growing market.
The Ministry of Planning in Baghdad (MoP) and the National Investment Commission (NIC) are regularly publishing tenders across various industries.
Please find below the official links to the latest tenders:
Other Links:
IV. Press Release
Iraq unveils US$250 bn investment drive - August 20, 2025
The National Investment Commission announced plans to attract US$250 billion in new investments over the next two years, building on more than US$100 billion already secured and highlighting reforms aimed at diversifying Iraq's economy
(Source: IraqiNews)
High level task force formed to boost Iraq's credit rating - August 20, 2025
Prime Minister Mohammed al-Sudani directed the creation of a national team, led by the Central Bank governor and comprising officials from finance, oil, and planning, to coordinate with Fitch, S&P, and Moody's on reforms aimed at enhancing the country's sovereign credit rating.
Cabinet awards Artawi oilfield contracts to Sinopec and ENKA - September 11, 2025
As part of phase two of the Artawi oilfield development, the Iraqi Cabinet awarded the Networks and Well Platforms tender to China's Sinopec. It approved an exception to award the Central Processing Facility tender to Turkey's ENKA.
Iraq and Chevron ink framework agreement for Nassiriya and Balad fields - August 19, 2025
Under the prime minister's patronage, the Oil Ministry and Chevron signed a principles agreement covering four exploration blocks in the Nasiriyah project and the Balad oil field. The deal aims to attract US expertise, transfer technology, and strengthen long‑term partnerships.
Foreign firms invited to build Al Faw Grand Port superstructure - July 6, 2025
The General Company for Ports stated that the infrastructure phase of the Al-Faw Grand Port is nearly complete and that 11 international firms have been invited to bid on completing its superstructure. The port's first phase is expected to be completed by 2028 and is anticipated to make Basra a central regional hub
US$3.5 bn GCC power grid expansion links Iraq - September 15, 2025
The Gulf Cooperation Council Interconnection Authority announced a US$3.5 billion expansion to double regional electricity transmission capacity. Iraq will benefit from a US$250 million link, supported by Kuwaiti financing, that will enable it to import power more reliably and reduce its dependence on Iranian supplies.
Karpowership to deliver 590 MW of floating power to Basra - August 23, 2025
BKPS, an affiliate of Karpowership, signed a contract with Iraq's Ministry of Electricity to supply up to 590 MW via two Powership vessels stationed in Basra. Operations are expected to begin in August 2025, providing a fast-track electricity connection to the national grid.
Jordan extends electricity supply deal; interconnection nearly complete - August 17, 2025
Jordan's National Electric Power Company agreed to extend its electricity‑supply contract with Iraq by one year. Officials stated that the second phase of the cross-border interconnection, which will deliver up to 150 MW, is 99% complete and is expected to be operational by August.
Grand Faw Port tunnel reaches key milestone - August 18, 2025
The General Company for Ports of Iraq began submerging the fifth concrete section of the immersed tunnel at the Grand Faw Port. The "Azaal" section crosses the deepest part of the Khor Al‑Zubair channel, while the connecting road to Umm Qasr is now 97 % complete.
Iraq's ports handle 22.4 Mt and 1,522 ships in H1 2025 - July 15, 2025
The General Company for Ports reported that Khor Al‑Zubair, Umm Qasr North, Umm Qasr South, and Abu Flous ports handled more than 22.4 million tons of cargo and received 1,522 ships during the first half of 2025, reflecting improved operational efficiency.
Rafidain Bank partners with K2 Integrity on compliance program - September 1, 2025
US consultancy K2 Integrity signed a strategic three-year partnership with state-owned Rafidain Bank to establish a comprehensive financial integrity program aligned with international compliance, governance, and risk management standards.
VI. Our Events Review
Business Breakfast in Erbil on July 28, 2025
About 60 attendees, including representatives from the Kurdistan Ministry of Trade, the German Consulate, and key partners, joined the inaugural AHK Business Breakfast in Erbil. Co-organized with Wilo MENA and Circular City, the session focused on commercial and residential water supply, highlighting Wilo's Emergency Water Project.
Business Breakfast in Baghdad on August 26, 2025
Co‑hosted with Salt & Associates, this breakfast in Baghdad gathered senior executives and legal professionals to review double taxation corporate income‑tax structures, compliance and audit risks, cross‑border taxation, and anticipated legal reforms.
Business Salon in Basra on August 28, 2025
AHK Iraq supported GIZ Iraq in launching the first Basra Business Salon. The Business Salon is a forum that brings together leaders from government, business, and industry.
The main topics of this session were the Iraq Development Road Project, Free Zones, and Investment Opportunities. AHK Iraq contributed to the panel discussion focused on the Development Road, highlighting Basra's pivotal role as a cornerstone in the new trade corridors shaping Iraq's economic future. German companies can contribute to this landmark project with their cutting-edge expertise and innovative solutions. We thank GIZ Iraq, the Basra Governorate, and all our partners for creating this platform to foster investment, job creation, and sustainable growth.
VII. Trade Fair Finder
In this section, all key trade fairs taking place in Iraq can be found. For a comprehensive list of upcoming trade fairs, please access the Auma FairFinder.
Regarding trade fairs in Germany, as the official partner of Deutsche Messe, we are supporting Iraqi exhibitors who wish to showcase their products at trade fairs in Germany. Please find an overview about all trade fairs and events organized by Deutsche Messe, here.
If you are an Iraqi exhibitor looking for more information, feel free to reach out to us for assistance and guidance.
VIII. Our DEinternational Services
Navigating new markets can be challenging - but you don’t have to do it alone. Under the umbrella of our service entity DEinternational GmbH, we offer the following tailored consultancy services:
- Initial Consultation
- Contact Finder
- Market Insight Reports
- Trade Fair Representation in Iraq
- Customized services available upon request.
IX. Our Partner Network
Disclaimer:
The information provided in this Newsletter is for general informational purposes only and does not constitute legal advice or legal consultation. While we strive to ensure the accuracy and timeliness of the content, we make no guarantees regarding its correctness, completeness, or current relevance. We accept no liability for any actions taken based on this information. For legal advice tailored to your specific situation, please consult a qualified legal professional.
