Occupation Government Hopes To Turn Iraq Into Low Tax Economy

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

24 September 2003

The occupation government in Iraq has passed new laws designed to turn the war-torn country's economy around, offering access to foreign banks and institutions, and low levels of tax, according to a Wall Street Journal report.

The Provisional Authority put in place by the Coalition had initially been reluctant to enact any sweeping reforms of the Iraqi economy, prefering to wait for the election of a permanent government. However, in view of new information with regard to the state of the country's infrastructure, the WSJ revealed, the Authority decided to act.

Speaking in Dubai at the weekend, following the signing of orders by Iraq administrator, L. Paul Bremer, Finance Minister Kamel al Gailani unveiled the proposed reforms.

Under the terms of the new economic plan, foreign investors will be permitted to own 100% of enterprises in all areas except real estate, oil, and natural resources. New banking laws will allow foreign banks to locate in the country, and over the next five years, up to six foreign institutions will be permitted to purchase 100% stakes in local banks, with restrictions lifted after that point.

Meanwhile, Iraqi enterprises and individuals will continue to benefit from a tax holiday until the end of 2003, after which they will be obliged to pay up to a top marginal income tax rate of 15%.

According to the WSJ, projected oil and tax revenues have been deemed sufficient to cover likely government expenditure by US officials.

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