They operate under a free zone law passed in 1998, when Saddam Hussein was still president. In March 2013, Iraq’s General Authority for Free Zones announced the establishment of a 6,563-square-metre private free zone in Baghdad, following an agreement with the City Centre for Vehicles Services Company.

With its focus on transport and logistics, the zone aims to promote the local economy and move business away from oil-based ventures. The new free zone will also accommodate industry and manufacturing, warehousing and banking services. While completion and launch dates have yet to be announced, it is expected to be up and running within a couple of years.

Oil generates about 95 per cent of foreign exchange earnings, and three wars and 13 years of economic sanctions have stifled development in the wider economy. Several sectors are, however, now poised for growth and the gradually improving security situation is bolstering investor confidence. Finance and investment, energy, construction and retail are all priority sectors, with transport and logistics set to follow.

Basra’s Khor al-Zubair Free Zone – adjacent to the port of the same name – has attracted significant investment since its establishment in 2004. This year, the free zone authority reportedly signed an investment contract for public transport and civil aviation facilities. A Turkish firm has also invested $700m in a steel plant within the 1-million-sq-m zone. Khor al-Zubair includes the Basra International Oil & Gas Hub, which was set up in 2009 and uses the port for Gulf access.

Free zone activity at the Flaifil zone in Nineveh is spread over 400,000 sq m, with road and rail links to Turkey, Syria and Jordan. As of April 2013, trade had slowed in the Al-Qaem zone, due to the ongoing conflict in nearby Syria.

According to reports in early 2013, two more free zones will be set up in Iraq: a joint zone at the international border area in the northern province of Dohuk, between the Iraqi Kurdistan region and Turkey; and a zone in Babil, 60 miles south of Baghdad, to facilitate the transportation of goods between the cities.

Fast facts

  • There are three free zones operating in Iraq, with three more in the pipeline.
  • A 6,563-square-metre free zone is planned for Baghdad, targeting transport and logistics.
  • The Flaifil Free Zone in the northern city of Nineveh covers 400,000 sq m.
  • Basra’s Khor al-Zubair Free Zone is spread over 1 million sq m.

Free zone list

Click on the free zone name for more details

Khor al-Zubair Free Zone

Flaifil

Al-Qaem Free Zone

Khor al-Zubair Free Zone (KAZFZ)

The KAZFZ is located at Basra’s Khor al-Zubair port, which is to be rebuilt with a $1.2bn loan from Japan. A new oil and gas international free zone within KAZFZ’s limits is being developed by the Basra International Oil & Gas Hub and is slated for completion in 2025.

Benefits

  • No customs duties or taxes on imports or exports
  • No value-added tax (VAT)
  • No capital gains or corporation tax
  • Offshore banking is permitted
  • No foreign exchange restrictions

Industries

  • Production, sales, assembly, manufacturing (currently petrochemicals, fertiliser, iron, steel and gas) and re-packing
  • Warehousing (re-export and trade)
  • Transport and logistics
  • Banking, insurance and re-insurance
  • Professional support services for industrial activities

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Flaifil

The 400,000-sq-m zone in Ninevah in northern Iraq started operating in 2010 and provides road and rail access to Turkey, Syria and Jordan.

Benefits

  • No customs duties or taxes on imports or exports
  • VAT
  • No capital gains or corporation tax
  • Offshore banking is permitted
  • No foreign exchange restrictions

Industries

  • Transport and logistics
  • Import/export

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Al-Qaem Free Zone

By April 2013, trade in the western Anbar governorate’s free zone was slow, or even non-existent, due to the conflict in neighbouring Syria.

Facilities

  • Stage 1 covers 70,000 sq m; stage 2 planned to cover 200,000 sq m
  • Road and rail links to Turkey, Jordan and Basra

Industries

  • Commercial/services

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Annual rents

Khor al-Zubair

From $3/sq m

Flaifil

From $1.50/sq m

Source: Iraq Embassy, Washington, US

Key contact

Iraqi Free Zone Authority, Ministry of Finance

601 Emerat Mansour, Baghdad, Iraq

Tel: (+964) 145 1982

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