58796 Iraq © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher,The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Additional copies of Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004:Understanding Regulations may be purchased at www.doingbusiness.org. ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Iraq. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Iraq is ranked 166 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Iraq - Compared to global good practice economy as well as selected economies: Iraq's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 166 Starting a Business 174 Dealing with Construction Permits 102 Registering Property 96 Getting Credit 168 Protecting Investors 120 Paying Taxes 54 Trading Across Borders 179 Enforcing Contracts 141 Closing a Business 183 2 Summary of Indicators - Iraq Starting a Business Procedures (number) 11 Time (days) 77 Cost (% of income per capita) 107.8 Min. capital (% of income per capita) 43.6 Dealing with Construction Permits Procedures (number) 14 Time (days) 215 Cost (% of income per capita) 506.8 Registering Property Procedures (number) 5 Time (days) 51 Cost (% of property value) 6.4 Getting Credit Strength of legal rights index (0-10) 3 Depth of credit information index (0-6) 0 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 0.0 Protecting Investors Extent of disclosure index (0-10) 4 Extent of director liability index (0-10) 5 Ease of shareholder suits index (0-10) 4 Strength of investor protection index (0-10) 4.3 Paying Taxes Payments (number per year) 13 Time (hours per year) 312 Profit tax (%) 14.9 Labor tax and contributions (%) 13.5 Other taxes (%) 0.0 Total tax rate (% profit) 28.4 Trading Across Borders Documents to export (number) 10 Time to export (days) 80 Cost to export (US$ per container) 3550 Documents to import (number) 10 Time to import (days) 83 Cost to import (US$ per container) 3650 3 Enforcing Contracts Procedures (number) 51 Time (days) 520 Cost (% of claim) 28.1 Closing a Business Recovery rate (cents on the dollar) 0.0 Time (years) no practice Cost (% of estate) no practice The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.28 0.24 Doing 0.20 business has become easier (DB 0.16 change score) 0.12 0.08 0.04 0.00 Saudi Iran, Islamic United Arab Jordan Iraq Oman Arabia Rep. Emirates 6 1. Benchmarking Starting a Business Regulations: Iraq is ranked 174 overall for Starting a Business. Ranking of Iraq in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Iraq compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Iraq 11 77 107.8 43.6 Comparator Economies Iran, Islamic Rep. 6 8 4.0 0.8 Jordan 8 13 44.6 17.9 Oman 5 12 3.3 288.4 Saudi Arabia 4 5 7.0 0.0 United Arab Emirates 8 15 6.4 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Iraq Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 174 174 Procedures (number) 11 11 11 11 Time (days) 77 77 77 77 Cost (% of income per capita) 93.5 150.7 75.9 107.8 Min. capital (% of income per capita) 65.4 59.1 30.3 43.6 3. The following graphs illustrate the Starting a Business sub indicators in Iraq over the past 4 years: 9 Starting a Business Summary - Iraq This table summarizes the procedures and costs associated with setting up a business in Iraq. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company City: Baghdad Registration Requirements: No: Procedure Time to complete Cost to complete 1 Search for a company name; obtain a name reservation letter from the 2 IQD 350,000 Baghdad Chamber of Commerce 2 Hire a lawyer to draft articles of association 1 IQD 900,000 3 Deposit initial capital at commercial bank and obtain confirmation 2 IQD 5,000 receipt 4 File for registration at the Commercial Registry 14 IQD 300,000 5 Advertise incorporation notice in the newspaper 3 USD 70 6 Make company seal 2 IQD 20,000 7 Obtain registration certificate 1 no charge 8 Report to tax authority to establish tax registration 2 IQD 450,000 10 9 Legalize accounting books 2 USD 150 10 Register employees for social security 3 IQD 20,000 11 Apply for a trade license 45 IQD 200,000 11 Starting a Business Details - Iraq Procedure 1 Search for a company name; obtain a name reservation letter from the Baghdad Chamber of Commerce Time to complete: 2 Cost to complete: IQD 350,000 Comment: The company name should be an Arabic name. A special department at the Chamber of Commerce, Trade Names, starts by searching the suggested name through their system to see if the name is already taken or reserved by another company. Once a name is agreed upon and available, the name is reserved upon payment of a nominal fee. The Federation of the Chambers of Commerce is informed in order to ensure that the chosen name is not taken through other Iraqi chambers of commerce. This procedure likely requires more than one visit to both chambers and client coordination, ending with filing the name with the Registrar. Procedure 2 Hire a lawyer to draft articles of association Time to complete: 1 Cost to complete: IQD 900,000 Comment: Because lawyers are required to draft the articles of association, lawyers are usually also in charge of completing the registration process. The cost varies with the law firm. Procedure 3 Deposit initial capital at commercial bank and obtain confirmation receipt Time to complete: 2 Cost to complete: IQD 5,000 Comment: After the company deposit the initial capital and obtains a confirmation receipt, which must be include with the application submitted to the Companies Registrar . The Capital will be recorded in the account of the company, once complete registration accure, it can be withdrawn immediately after certifcate assued by the Registrar. Procedure 4 File for registration at the Commercial Registry Time to complete: 14 Cost to complete: IQD 300,000 Comment: Fees are paid directly to the Commercial Registrar. The fee schedule adopted by the Companies Registrar at the Ministry combines different fees (Registrar's fee, stamp duty, filing fees, certain checking process, etc.), which are cumulative, according to company capital. The Company Registrar circulates the registration certificate to the bank, the tax authority, and other relevant agencies, including labor and so forth. The following documents and information must be presented to the Registrar: The following documents and information must be presented to the Registrar as attached to the application for registration submitted to the Registrar. - Baghdad Chamber of Commerce letter ( to reserved or trade name). 12 - Chambers of Commerce Union letter (to ensure the consistency of the company or trade name with other registrations). - Certified letter from the company's bank. - Tax clearance for all Founders of the company. - Iraqi identify cards. - Iraqi certificated citizenship. - Ration card (food distribution form). - Address certificate letter from the mayor's office. - Phone number(s), email address(es), and P.O. box number(s) of the company's founder(s). The registration fees are calculated as follows: - Baghdad Chamber of Commerce fees: IQD 45,000. - Chambers of Commerce Union fees: IQD 15,000. - Bank fees: IQD 25,000. - Company registration fees: based on company capital. Procedure 5 Advertise incorporation notice in the newspaper Time to complete: 3 Cost to complete: USD 70 Comment: Once the registration has been approved, the Companies Registrar issues a letter to request the two required publications, but the process must be followed up by the registration agent (lawyer), who must submit a copy of each publication to the registry. Procedure 6 Make company seal Time to complete: 2 Cost to complete: IQD 20,000 Comment: Procedure 7 Obtain registration certificate Time to complete: 1 Cost to complete: no charge Comment: Once all related procedures, including both publications, are complete, the Companies Registrar issues the certification of registration. On the date of issuance, the company acquires its legal personality. A registration circular will be sent to all entities concerned. Procedure 8 Report to tax authority to establish tax registration Time to complete: 2 Cost to complete: IQD 450,000 Comment: The initial tax registration is important to commence company operations. On a date set by the tax authority, the company must submit its first balance sheet to the tax authority, which will then provide the company its tax identification number on the same day. Procedure 9 Legalize accounting books Time to complete: 2 Cost to complete: USD 150 13 Comment: The General Body of Taxes must notarize or register the company accounting books and any new accounting books. Procedure 10 Register employees for social security Time to complete: 3 Cost to complete: IQD 20,000 Comment: The cost for social security registration depends on the number of employees. Any company employing more than three employees is bound, under the Social Security Law, to enroll their employees into the social security insurance program. The employer will deduct 5% from the employee's salary and add to it an amount equal to 12% of the employee's salary, resulting in a total payment of 17% to the Social Security Authority. Procedure 11 Apply for a trade license Time to complete: 45 Cost to complete: IQD 200,000 Comment: 14 15 1. Benchmarking Dealing with Construction Permits Regulations: Iraq is ranked 102 overall for Dealing with Construction Permits. Ranking of Iraq in Dealing with Construction Permits - Compared to good practice and selected economies: 16 The following table shows Dealing with Construction Permits data for Iraq compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Iraq 14 215 506.8 Comparator Economies Iran, Islamic Rep. 17 322 382.3 Jordan 19 87 634.1 Oman 15 186 106.2 Saudi Arabia 12 89 43.8 United Arab Emirates 17 64 35.8 17 2. Historical data: Dealing with Construction Permits in Iraq Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 95 102 Procedures (number) 14 14 14 14 Time (days) 215 215 215 215 Cost (% of income per capita) 915.0 915.0 397.9 506.8 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Iraq over the past 4 years: 18 Dealing with Construction Permits in Iraq The table below summarizes the procedures, time, and costs to build a warehouse in Iraq. BUILDING A WAREHOUSE City: Baghdad Registration Requirements: No: Procedure Time to complete Cost to complete 1 Pay paving and inspection fees to the municipality 3 days USD 100 2 Obtain planning permission and location clearances from the municipal 28 days USD 200 authority 3 Obtain location clearances and guidelines for construction from the 14 days USD 100 regional authority 4 Obtain a lot plan with site map from the municipal authority 14 days USD 500 5 Obtain project clearance from Ministry of Communications 30 days USD 400 6 * Obtain project approval from the electric power company 21 days USD 8,000 7 * Obtain project clearance from the water and sewerage directorate 14 days USD 500 8 Obtain a building permit from the municipality 30 days no charge 19 9 Obtain approval of completed project from the municipal authority 1 day no charge 10 Obtain approval of the completed project from the National Center of 30 days no charge Construction Laboratory 11 * Request and receive final inspection by the National Center of 14 days no charge Construction Laboratory 12 * Obtain water and sewerage connection 65 days USD 500 13 * Obtain power connection 30 days USD 300 14 * Obtain telephone connection 30 days USD 600 * Takes place simultaneously with another procedure. 20 Dealing with Construction Permits Details - Iraq Procedure 1 Pay paving and inspection fees to the municipality Time to complete: 3 days Cost to complete: USD 100 Agency: Municipality Comment: Procedure 2 Obtain planning permission and location clearances from the municipal authority Time to complete: 28 days Cost to complete: USD 200 Agency: Municipality Comment: Procedure 3 Obtain location clearances and guidelines for construction from the regional authority Time to complete: 14 days Cost to complete: USD 100 Agency: Regional Authority Comment: Procedure 4 Obtain a lot plan with site map from the municipal authority Time to complete: 14 days Cost to complete: USD 500 Agency: Municipality Comment: This document is valid for a year. Procedure 5 Obtain project clearance from Ministry of Communications Time to complete: 30 days Cost to complete: USD 400 Agency: Ministry of Communications 21 Comment: Procedure 6 Obtain project approval from the electric power company Time to complete: 21 days Cost to complete: USD 8,000 Agency: Baghdad Electricity Company Comment: The project approval cost is for purchase, supply, transport, and installation of the transformer. Procedure 7 Obtain project clearance from the water and sewerage directorate Time to complete: 14 days Cost to complete: USD 500 Agency: Water and Sewage Directorate Comment: Procedure 8 Obtain a building permit from the municipality Time to complete: 30 days Cost to complete: no charge Agency: Municipality Comment: Procedure 9 Obtain approval of completed project from the municipal authority Time to complete: 1 day Cost to complete: no charge Agency: Municipality Comment: Procedure 10 Obtain approval of the completed project from the National Center of Construction Laboratory Time to complete: 30 days Cost to complete: no charge Agency: National Center of Construction Laboratory 22 Comment: Procedure 11 Request and receive final inspection by the National Center of Construction Laboratory Time to complete: 14 days Cost to complete: no charge Agency: National Center of Construction Laboratory Comment: Procedure 12 Obtain water and sewerage connection Time to complete: 65 days Cost to complete: USD 500 Agency: Baghdad Water Company Comment: Procedure 13 Obtain power connection Time to complete: 30 days Cost to complete: USD 300 Agency: Baghdad Electricity Company Comment: Procedure 14 Obtain telephone connection Time to complete: 30 days Cost to complete: USD 600 Agency: Iraqna Telephone Company Comment: 23 24 1. Benchmarking Registering Property Regulations: Iraq is ranked 96 overall for Registering Property. Ranking of Iraq in Registering Property - Compared to good practice and selected economies: 25 The following table shows Registering Property data for Iraq compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Iraq 5 51 6.4 Comparator Economies Iran, Islamic Rep. 9 36 10.5 Jordan 7 21 7.5 Oman 2 16 3.0 Saudi Arabia 2 2 0.0 United Arab Emirates 1 2 2.0 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 26 2. Historical data: Registering Property in Iraq Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 104 96 Procedures (number) 5 5 5 5 Time (days) 51 51 51 51 Cost (% of property value) 6.3 6.5 7.7 6.4 3. The following graphs illustrate the Registering Property sub indicators in Iraq over the past 4 years: 27 Registering Property in Iraq This topic examines the steps, time, and cost involved in registering property in Iraq. STANDARDIZED PROPERTY Property Value: 114,779,904.16 City: Baghdad Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain a new form for the property title and a 7 days IQD 5,000 (copying Map cadastral map at the Real Property Registry and Deed) 2 Obtain an approval determining the type of the real 21 days IQD 10 000 property and zoning restrictions 3 Property inspection for valuation by the Real Estate 10 days No cost registry 28 4 Evaluation by Tax Authorities 10 days Income Tax is paid according to the following cumulative values:Value of Property (in IQD) First 20 million dinarExempted 3%on the next 30 million dinars; 4%on the following 30 million up to 60 million dinars; 5%on the following 60 million up to 90 million dinars; and 6%of any amount over the following 90 million dinars (in practice for property values over 110 million dinars). 5 Apply for registration at the Real Property Registry 3 days 3% of property value (Registration fee) 29 Registering Property Details - Iraq Procedure 1 Obtain a new form for the property title and a cadastral map at the Real Property Registry Time to complete: 7 days Cost to complete: IQD 5,000 (copying Map and Deed) Agency: Real Property Registry Comment: A new title elucidation (statement of data relevant to the property under registration) is drafted. This is free of charge. A competent team is formed to estimate the value of the property. This does not involve an inspection of the property. The team consists of the following persons: - The Director General of the Real Property Registry of his representative - The representative of the State Commission of Income Tax - The applicant for survey or his representative. - A request is submitted to the registry manager to obtain new title elucidation - The seller and the buyer must be present in person or their legal representative together. - Checking the seller record in the computer Database to identify if he was former official in the previous regime and if the property was inalienable. - Checking on computer whether there is any mortgage, encumbrances or not, then fix the information on the new deed title draft. - checking the IDs issuance for both the seller & buyer. (Proof of identity is obtained by sending a letter sent to the nationality authority - jinsiya). - Food card, Baghdad resident card, Iraqi Nationality Certificate, Jiseea, Land Deed. The cadastral map of the property should be in the file and send sent to the zone municipality. Note: sometimes the old file & documents of the property are missing from the archive and checking requires more time. Procedure 2 Obtain an approval determining the type of the real property and zoning restrictions Time to complete: 21 days Cost to complete: IQD 10 000 Agency: Municipality Comment: An approval to the transfer should be obtained from the Municipality Office, determining the type of the real property and the way to occupy it (zoning restrictions). It is quite easy to obtain this approval because it will not alter the way to use the property but only confirm that the way to occupy the property will be as per the purpose being set by the Municipality. The Municipality will check for any inconsistency on the property, if there are any required charges have to be paid. An investigation team from the Municipality will visit the property to confirm its status and if there were any changes done since its last investigation and in correlation with the old property map. Investigators are governmental employees only. Arrangement of the investigation team and fulfillment of the visit take 2-3 days. The new investigation report will be attached to the new cadastral certificate. The Municipality will check all services charges owe by the property owner in order to be paid prior to the approval that the property is free from any outstanding charges, such as Electricity, Drinking water, waste water and road asphalting. Unless the Seller have the receipt that the asphalting charges were paid, even it was done more 30 than 10 years ago, he will have to pay about 2000 ID / meter length of asphalted road in front of the property, in addition of time delay. After completion all requirements, Municipality will send the New Cadastral Certificate ( NCC )by mail to the Cadastre. The overall time elapsed from receipt of the NCC by the municipality by mail - property investigation - pay all due charges until reception by the Cadastre by mail as well, the average time is 21 days. A committee to visit the property for inspection to check if there is any changes or additions with reference to the original construction map, this will determine the amount of fines to be paid. - inspection fees 4000 IQD. - numeration fees 6000 IQD. - paving fees = the front of the property m2× 2455 IQD / m2. - in case of fines impsed in the past , all fine should be paid. Procedure 3 Property inspection for valuation by the Real Estate registry Time to complete: 10 days Cost to complete: No cost Agency: Real Estate Registry Comment: Upon receipt of the New Cadastral Certificate from the Municipality, a competent team is formed by the cadastre (Real Property Registry Office) consisting of the following persons in order to estimate the current value of the property. There is fixed day for the purpose of property evaluation of each area covered by the same property registry office. - Representative of the real property registry office. - Representative of the Province Main real property registry office. - Representative of the state commission of income tax. The evaluation team have regulations for the evaluation range of each land location depending on the degree of civilization, how close to the city center, type and level of the property building, how old it is, the type of roofing and finishing with endeavor of evaluation with the minimum price / meter square or higher. From the time the New Cadastral Certificate is received by the Real Estate Registry and the time the inspection appointment is confirmed, it will take approximately 3 days. The inspection will take place, and the team will provide a report that will be used for the evaluation of the property. However, if the buyer objects to the estimate, then there is another inspection and a final report will be re-issued. All documents will then be sent to the Tax Authority once the report is final. This report will be used as a base by the Tax Authority to estimate the amount of taxes to be paid. Transmission of documents to the Tax Authority is done by mail. Note: The buyer will provide transportation for the evaluation team and will be charged an amount between 10000-15000 Dinars. This is an unofficial cost. There is possibility to request a certificate showing that the property is free of mortgage and encumbrances from the Registry Office by a governmental authority only. Procedure 4 Evaluation by Tax Authorities Time to complete: 10 days 31 Cost to complete: Income Tax is paid according to the following cumulative values:Value of Property (in IQD) First 20 million dinarExempted 3%on the next 30 million dinars; 4%on the following 30 million up to 60 million dinars; 5%on the following 60 million up to 90 million dinars; and 6%of any amount over the following 90 million dinars (in practice for property values over 110 million dinars). Agency: Income Tax Authority Comment: The Seller or his representative has to follow up on the receipt and measures in the Tax Commission Office. First, the Tax commission will check whether the property is occupied or not and compare with information they have in their files. Then both the Seller and the Buyer must obtain several tax clearances even from other Tax Authorities offices. And all documents are sent to the Tax Authority by mail. The time needed is 2 days on average for this step. The Tax Authority might or might not object the evaluation of the Property Registry Office. If they decide to evaluate the property with higher price, the seller cannot object and the tax calculation will depend on the new evaluation, whichever is higher. The seller pays the tax for the property evaluation according to the following fee schedule (this amount is apportioned among partners if the land is owned jointly); First 20 million dinar exempted. 3% up to 30 million dinars; 4% of any amount over 30 million up to 60 million dinars; 5% of any amount over 60 million up to 90 million dinars; and 6% of any amount over 90 million dinars. Payment is made by certified check from a named Bank (Governmental) by all amounts of tax decided by the Tax Authority. The final Tax cleared Cadastral Certificate will be resend to the Property Registry Office by mail. Procedure 5 Apply for registration at the Real Property Registry Time to complete: 3 days Cost to complete: 3% of property value (Registration fee) Agency: Real Property Registry Comment: The buyer applies for registration and a new title at the Real Property Registry. Afterwards, the transaction process will be recorded in the official registers and the buyer will then be granted a new title of property on the same day. New remarks: The same section which opened the new cadastral document will calculate the amount of property transfer fees which is equal to % 3 of the property evaluation, Payment is made by certified cheque from either Named Governmental Bank or Named Private Bank. Payment can also be made in cash at the Property Registry Office. Once payment is received, the Property Registry Office will issue a new Property Deed in the name of the Buyer, then the process regarded finalized. The Property Registry Office will send later the new ownership details to the Main property registration office. The registration fee, equal to 3% of the value of the property, is paid by means of an endorsed cheque to the account of the Real Property Registry before applying for registration. 32 33 1. Benchmarking Getting Credit Regulations: Iraq is ranked 168 overall for Getting Credit. Ranking of Iraq in Getting Credit - Compared to good practice and selected economies: 34 The following table shows Getting Credit data for Iraq compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Iraq 3 0 0.0 0.0 Comparator Economies Iran, Islamic Rep. 4 4 22.7 4.5 Jordan 4 2 1.5 0.0 Oman 4 2 19.6 0.0 Saudi Arabia 5 6 0.0 18.0 United Arab Emirates 4 5 8.4 17.7 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 35 2. Historical data: Getting Credit in Iraq Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 167 168 Strength of legal rights index (0-10) 3 3 3 3 Depth of credit information index (0-6) 0 0 0 0 Private bureau coverage (% of adults) 0.0 0.0 0.0 0.0 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Iraq over the past 4 years: 36 Getting Credit in Iraq The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Iraq. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 0 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No No 0 Is it guaranteed by law that borrowers can inspect their data in the No No 0 largest credit registry? Coverage 0.0 0.0 Number of individuals 0 0 Number of firms 0 0 37 Strength of legal rights index (0-10) 3 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, No proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations No and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes Does the law authorize parties to agree on out of court enforcement? No 38 39 1. Benchmarking Protecting Investors Regulations: Iraq is ranked 120 overall for Protecting Investors. Ranking of Iraq in Protecting Investors - Compared to good practice and selected economies: 40 The following table shows Protecting Investors data for Iraq compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Iraq 4.3 Comparator Economies Iran, Islamic Rep. 3.0 Jordan 4.3 Oman 5.0 Saudi Arabia 7.0 United Arab Emirates 4.3 41 2. Historical data: Protecting Investors in Iraq Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 119 120 Strength of investor protection index (0-10) 4.3 4.3 4.3 4.3 3. The following graph illustrates the Protecting Investors index in Iraq compared to best practice and selected Economies: 9.7 7.0 5.0 4.3 4.3 4.3 3.0 an an a nd aq bi m rd ra O Ir a ra ed . Jo al , ep an iA t Ze ni R ir b Ir ud U es ic ew Sa at m A N la Em Is Note: The higher the score, the greater the investor protection. 42 Protecting Investors in Iraq The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Iraq. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 4 1 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 1 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 5 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 2 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 0 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 43 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 4 3 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 0 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 4.3 44 45 1. Benchmarking Paying Taxes Regulations: Iraq is ranked 54 overall for Paying Taxes. Ranking of Iraq in Paying Taxes - Compared to good practice and selected economies: 46 The following table shows Paying Taxes data for Iraq compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Iraq 13 312 28.4 Comparator Economies Iran, Islamic Rep. 20 344 44.1 Jordan 26 101 31.2 Oman 14 62 21.6 Saudi Arabia 14 79 14.5 United Arab Emirates 14 12 14.1 * The following economies are also good practice economies for : Payments (number per year): Qatar 47 2. Historical data: Paying Taxes in Iraq Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 52 54 Total tax rate (% profit) 28.4 28.4 28.4 28.4 Payments (number per year) 13 13 13 13 Time (hours per year) 312 312 312 312 3. The following graphs illustrate the Paying Taxes sub indicators in Iraq over the past 4 years: 48 Paying Taxes in Iraq The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Iraq, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Social security 12 288 12.0% gross salaries 13.50 Corporate income tax 1 24 15.0% taxable profit 14.90 Totals 13 312 28.4 49 50 1. Benchmarking Trading Across Borders Regulations: Iraq is ranked 179 overall for Trading Across Borders. Ranking of Iraq in Trading Across Borders - Compared to good practice and selected economies: 51 The following table shows Trading Across Borders data for Iraq compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Iraq 10 80 3550 10 83 3650 Comparator Economies Iran, Islamic Rep. 7 25 1090 8 32 1735 Jordan 7 14 825 7 18 1335 Oman 9 14 766 9 17 890 Saudi Arabia 5 13 580 5 17 686 United Arab Emirates 4 7 521 5 7 542 * The following economies are also good practice economies for : Time to export (days): Estonia 52 2. Historical data: Trading Across Borders in Iraq Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 180 179 Cost to export (US$ per container) 3400 3900 3900 3550 Cost to import (US$ per container) 3400 3900 3900 3650 Documents to export (number) 10 10 10 10 Documents to import (number) 10 10 10 10 Time to export (days) 102 102 102 80 Time to import (days) 101 101 101 83 3. The following graphs illustrate the Trading Across Borders sub indicators in Iraq over the past 4 years: 53 54 Trading Across Borders in Iraq These tables list the procedures necessary to import and export a standardized cargo of goods in Iraq. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 50 1050 Customs clearance and technical control 13 700 Ports and terminal handling 7 300 Inland transportation and handling 10 1500 Totals 80 3550 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 50 1150 Customs clearance and technical control 15 700 Ports and terminal handling 12 300 Inland transportation and handling 6 1500 Totals 83 3650 55 Documents for Export and Import Export Bill of lading Certificate of origin Commercial invoice Customs export declaration Export license Inspection report Packing list Pre-shipment inspection clean report of findings Technical standard/health certificate Terminal handling receipts Import Bill of lading Certificate of origin Commercial invoice Customs import declaration Import license Inspection report Packing list Pre-shipment inspection clean report of findings Technical standard/health certificate Terminal handling receipts 56 57 1. Benchmarking Enforcing Contracts Regulations: Iraq is ranked 141 overall for Enforcing Contracts. Ranking of Iraq in Enforcing Contracts - Compared to good practice and selected economies: 58 The following table shows Enforcing Contracts data for Iraq compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Iraq 51 520 28.1 Comparator Economies Iran, Islamic Rep. 39 505 17.0 Jordan 38 689 31.2 Oman 51 598 13.5 Saudi Arabia 43 635 27.5 United Arab Emirates 49 537 26.2 59 2. Historical data: Enforcing Contracts in Iraq Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 138 141 Procedures (number) 51 51 51 51 Time (days) 520 520 520 520 Cost (% of claim) 32.5 32.5 27.3 28.1 3. The following graphs illustrate the Enforcing Contracts sub indicators in Iraq over the past 4 years: 60 Enforcing Contracts in Iraq This topic looks at the efficiency of contract enforcement in Iraq. Nature of Procedure (2010) Indicator Procedures (number) 51 Time (days) 520 Filing and service 60.0 Trial and judgment 360.0 Enforcement of judgment 100.0 Cost (% of claim)* 28.10 Attorney cost (% of claim) 22.5 Court cost (% of claim) 2.3 Enforcement Cost (% of claim) 3.3 61 Court information: Bagdad First Instance Court (" ") * Claim assumed to be equivalent to 200% of income per capita. 62 63 1. Benchmarking Closing Business Regulations: Iraq is ranked 183 overall for Closing a Business. Ranking of Iraq in Closing Business - Compared to good practice and selected economies: 64 The following table shows Closing Business data for Iraq compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Iraq 0.0 no practice no practice Comparator Economies Iran, Islamic Rep. 23.1 4.5 9 Jordan 26.9 4.3 9 Oman 34.9 4.0 4 Saudi Arabia 36.8 1.5 22 United Arab Emirates 11.2 5.1 30 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 65 2. Historical data: Closing Business in Iraq Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 183 183 Time (years) no practice no practice no practice no practice Cost (% of estate) no practice no practice no practice no practice Recovery rate (cents on the dollar) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Closing Business sub indicators in Iraq over the past 4 years: 66 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 67 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Iran, Islamic Rep. The Islamic Republic of Iran eased business start-up by installing a web portal allowing entrepreneurs to search for and reserve a unique company name. The establishment of a new private credit bureau improved access to credit information. The Islamic Republic of Iran made enforcing contracts easier and faster by introducing electronic filing of some documents, text message notification and an electronic case management system. Jordan Jordan improved its credit information system by setting up a regulatory framework for establishing a private credit bureau as well as lowering the threshold for loans to be reported to the public credit registry. Jordan abolished certain taxes and made it possible to file income and sales tax returns electronically. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Saudi Arabia Saudi Arabia made dealing with construction permits easier for the second year in a row by introducing a new, streamlined process. An amendment to Saudi Arabia's commercial lien law enhanced access to credit by making secured lending more flexible and allowing out-of-court enforcement in case of default. Saudi Arabia reduced the time to import by launching a new container terminal at the Jeddah Islamic Port. Saudi Arabia speeded up the insolvency process by providing earlier access to amicable settlements and putting time limits on the settlements to encourage creditors to participate. 68 Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. United Arab Emirates The United Arab Emirates enhanced access to credit by setting up a legal framework for the operation of the private credit bureau and requiring that financial institutions share credit information. The United Arab Emirates streamlined document preparation and reduced the time to trade with the launch of Dubai Customs' comprehensive new customs system, Mirsal 2. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 69 70