Ali Zuweid's Political Programme · Proposed legislation · Economy, Finance, Investment and Employment
Entrepreneurship, Start-ups and Small and Medium Enterprises Law
A unified legislative framework that turns support for entrepreneurship from scattered initiatives into a measurable legal system: clear definitions and classification, registration and digitization, regulated finance, market access, protection of competition and public funds, and a practical path into the formal economy.
Executive Summary
Iraq is not starting from scratch in supporting small enterprises. The Income-Generating Small Enterprises Support Law No. (10) of 2012 remains in force; it was amended by Law No. (14) of 2023, followed by new implementing instructions in 2025. It establishes a fund within the Ministry of Labour and Social Affairs and provides loans to specified groups to promote employment. Meanwhile, the Companies Law No. (21) of 1997, as amended, governs legal forms of companies. In 2025, the Ministry of Justice adopted a standard contract for simple companies, while the Ministry of Trade manages electronic company registration services.
These components do not yet constitute a general entrepreneurship law. The current framework is divided among company legislation, a special employment-lending law, banking programmes, government and international initiatives, and policies under preparation. In 2025, the Ministry of Planning worked with the International Labour Organization on a national policy for small and medium enterprise development. In 2026, work continued with the World Bank on the entrepreneurial environment and with the International Labour Organization on transition to the formal economy. The Central Bank also expanded enterprise-financing instruments under the National Lending Strategy 2024–2029, launched an access-to-finance guide, and in July 2026 announced an increased ceiling for the micro, small and medium enterprise financing initiative and relaxation of some borrowing requirements.
The central legislative gap is the absence of a unified framework answering simple but decisive questions: What is a micro, small or medium enterprise? What makes an establishment a “start-up” rather than merely a new company? How is that status registered and used across authorities? How does the state prevent duplicate grants and loans? How can informal enterprises register without an amnesty for fraud or disregard for workers' rights? And how can finance, venture capital and crowdfunding be opened up without exceeding the powers of the Central Bank and Securities Commission or exposing the public to unlicensed platform risks?
POL-46 therefore proposes neither a new independent agency nor another large fund. It establishes a national coordinating council with a technical secretariat in the Ministry of Planning, relying on existing registers, executive bodies and regulators. Law No. (10) of 2012 retains its role as a specific lending and employment programme. The powers of the Companies Registrar, Central Bank, Securities Commission and sectoral bodies are also preserved. The innovation is a legal framework connecting these systems and giving investors, entrepreneurs and the state a shared definition and a unified pathway for data and programmes.
The draft deliberately avoids blanket tax exemptions, a fixed procurement quota or automatically guaranteed loans. These instruments become costly and vulnerable to abuse when granted simply because an enterprise is small. Instead, the law requires transparent programmes and assessment of market gaps, and enables partial credit guarantees, venture capital, crowdfunding once regulated, division of government contracts where economical, incubator services, development vouchers, simplified registration and an orderly transition to the formal economy.
The intended outcome is to turn the “small project” from a beneficiary waiting for a government loan into an enterprise with a legal identity and verifiable data, able to open an account, finance operations, compete for a contract, sell products and grow. The law treats successful growth beyond the “small” category as a positive outcome, rather than grounds for abruptly losing all benefits, through transition rules and periodic classification review.
Current legal and institutional context
Legislative intervention rests on Articles (25) and (26) of the Constitution, requiring the state to reform the economy on modern foundations, encourage and develop the private sector, and promote investment. This is a constitutional basis for enabling conditions, not authorization for unlimited preferential treatment or public spending without criteria.
The corporate legal framework rests on the Companies Law No. (21) of 1997, as amended. A further amendment was published in the Iraqi Gazette in 2019, while the Ministry of Trade continued operating the Companies Registration Department and its electronic services. In March 2025, the Ministry of Justice adopted a standard simple-company contract under Article (183) of the Companies Law, a practical move to reduce administrative complexity within the existing legal system.
In social finance and employment, the Income-Generating Small Enterprises Support Law No. (10) of 2012, as amended, establishes a specialized small-enterprise system and a fund within the Ministry of Labour and Social Affairs. It was amended in 2023, followed by Instructions No. (2) of 2025 to facilitate implementation. A new law should neither ignore nor duplicate this fund. The draft therefore preserves it as a specific pathway and treats it as one programme integrated with the general national register.
For registration, the Ministry of Trade and International Labour Organization launched a digital guide to registering small enterprises and businesses in September 2025, aimed at simplifying entry of micro, small and medium enterprises into the formal economy. In 2026, the Ministry of Planning and international partners were leading a broader national process on entrepreneurship and formalization, confirming that the problem is no longer the absence of one initiative but the need for a comprehensive institutional and legal framework.
In finance, the Central Bank published the National Bank Lending Strategy 2024–2029, launched an enterprise-finance access guide in 2025, and on 9 July 2026 announced a higher ceiling for the micro, small and medium enterprise financing initiative, strengthened bank liquidity and simplified certain procedures. Rules also exist for non-bank enterprise-financing companies. Credit, finance and payment regulation must therefore remain under Central Bank authority, not a new administrative council.
Equity finance, venture capital and investment crowdfunding intersect with the Securities Commission's powers. The Commission announced its 2026–2028 strategy and continued work to complete the permanent legislative framework for the capital market. This law therefore does not independently authorize an unrestricted crowdfunding platform; it creates a legislative basis for developing these instruments, subject to regulation by the competent supervisor before they are offered to the public.
Legislative Gap
The first problem is multiple definitions. The “small enterprise” definition in the Ministry of Labour's lending law was designed for a particular employment programme and is insufficient by itself for credit, statistics, procurement or venture-capital policy. Iraq needs an updatable general classification based on employment, revenue, assets and sector characteristics, while allowing special laws to use narrower definitions for their programmes.
The second problem is the absence of clear legal start-up status. A start-up is neither a promotional label nor a synonym for a small enterprise; it is a relatively young business developing a scalable product, service, technology or business model. Failure to distinguish these concepts wastes support on conventional establishments that do not need innovation instruments, or denies an innovative venture investment tools merely because it employs few people.
The third problem is the fragmented entrepreneurial journey across registration, taxation, social security, licensing, financing and programmes. Realistic reform does not mean abolishing institutions, but connecting them digitally, adopting a unique enterprise number and the “submit data once” principle, and publishing an accurate legal map of procedures, fees and timeframes.
The fourth problem is the dominance of government lending in enterprise support. Credit matters, but it is neither the only instrument nor appropriate at every stage. A high-risk start-up may need venture capital rather than a conventional loan; a small government supplier may need invoice finance; and an informal establishment may need simplified accounting and registration rather than a grant. The law distinguishes these instruments and places each under its regulator.
The fifth problem is evasion and favouritism. Special incentives may encourage a large company to split into smaller entities or use a nominee owner, while incubators and grants may become channels for distributing money without results. The draft therefore links classification to the “economic unit”, requires disclosure of support and conflicts of interest, evaluation and publication of outcomes, and recovery of benefits obtained through fraud.
Legislative design
| Issue | Legislative choice | Reason for the choice |
|---|---|---|
| Lead institution | Coordinating council with a Ministry of Planning secretariat | Avoid a new agency duplicating the work of the trade and labour authorities, Central Bank and Securities Commission. |
| Classification | An updatable national system based on employment, revenue and assets | Avoid fixing monetary thresholds that inflation erodes or that vary across sectors. |
| Start-up | Temporary status based on innovation, age and independence | Distinguish conventional new activity from enterprises capable of innovation and scalable growth. |
| Law 10 of 2012 | Remains in force as a specific programme | Avoid dismantling an existing fund and lending programmes with recently amended laws and instructions. |
| Financing | A mix of credit, partial guarantees, venture capital and regulated crowdfunding | Established enterprises and innovative start-ups have different needs. |
| Taxation | No automatic blanket exemption | Prevent artificial company fragmentation and revenue loss; simplification belongs in tax legislation. |
| Procurement | Division of contracts and proportionate requirements, without a fixed quota in this law | Broaden competition while leaving preferential percentages to the relevant procurement legislation. |
| Informal economy | A transition pathway and settlement of minor administrative violations | Encourage registration without amnestying fraud or disregarding workers' and consumers' rights. |
The draft adopts a legislative approach of limited institutional expansion and strong rules: the state establishes a shared definition, registers status, connects data, regulates support and opens markets. It does not manage every enterprise, become a universal direct lender or guarantee business success. Commercial risk remains with founders and financiers, while the state is responsible for clear rules, verifiable data and fair competition.
Text of the bill
In the name of the people
Presidency of the Republic
Pursuant to the enactment of the Council of Representatives in accordance with the Constitution, the following law is issued:
Chapter 1 — General provisions, definitions and principles
Article (1) — Title and scope
This law shall be called the “Entrepreneurship, Start-ups and Small and Medium Enterprises Law”. It establishes a general federal framework for entrepreneurship development, regulation of start-up status, classification of micro, small and medium enterprises, facilitation of formalization, and coordination of support programmes and access to finance and markets, without prejudice to applicable sectoral laws.
Article (2) — Objectives
This law aims to diversify the economic base, increase creation of productive private enterprises with growth potential, reduce the cost of entering the formal economy, improve financing, investment and market access, and encourage innovation, competition and decent work, while protecting public funds and preventing favouritism and abuse of incentives.
This law shall be interpreted to ensure proportionality between enterprise size and regulatory risks and to prevent small size from becoming a permanent exemption from workers' rights, taxes, safety standards or consumer protection.
Article (3) — Definitions
The following expressions have the meanings stated: “entrepreneur”: a natural person establishing or developing an economic activity independently or through an enterprise; “enterprise”: any natural or legal person conducting a lawful economic activity; “micro, small or medium enterprise”: an enterprise classified under Article (20); “start-up”: a registered enterprise meeting this law's age, innovation, growth-potential and independence criteria; “window”: the national digital platform for entrepreneurship and enterprise services; “Council”: the National Council for Entrepreneurship and Small and Medium Enterprises; “coordinating authority”: the Ministry of Planning; “sectoral regulators”: bodies legally responsible for regulating banks, securities, communications, health, the environment and other regulated activities.
Article (4) — Distinction between a small enterprise and a start-up
An enterprise is not a start-up merely because it is newly established or small. Start-up status requires innovation or a business model, technology or process capable of scalability or rapid growth under objective criteria issued pursuant to this law. A start-up may be micro, small or medium according to its size.
Article (5) — Principles of application
State policy in this area rests on competitive neutrality, equal opportunity, digital registration, clear criteria, proportionate obligations, private-property protection, freedom of contract within legal limits, non-discrimination, transparency and support linked to measurable outcomes.
No advantage shall be granted based on political, tribal, religious or ethnic affiliation, kinship or official influence. Any such intervention constitutes a serious breach of public-service duties.
Article (6) — Relationship with applicable laws
This law applies in conjunction with the Companies Law No. (21) of 1997, as amended; the Income-Generating Small Enterprises Support Law No. (10) of 2012, as amended; and labour, social security, tax, banking, securities, competition, procurement, insolvency, intellectual property, investment and other relevant laws.
Small-enterprise or start-up status does not authorize a regulated activity requiring a sectoral licence or replace safety, health, environmental, consumer-protection, anti-money-laundering or beneficial-ownership requirements.
Article (7) — Continuation of the Income-Generating Small Enterprises Support Law
The Income-Generating Small Enterprises Support Law No. (10) of 2012, as amended, remains in force as a specific regime for Ministry of Labour and Social Affairs lending and employment programmes. Its beneficiaries may enter the national register under this law without losing rights or changing loan terms. The special law's definitions apply to its programmes where they differ from the general classification.
Article (8) — No automatic tax privileges
This law creates no blanket or permanent tax exemption merely for start-up or small-enterprise status. Any simplified tax treatment or incentive must be established in the relevant tax legislation, limited in duration and purpose, evaluable, and neither distort competition nor encourage artificial enterprise fragmentation.
Article (9) — Protection of fundamental rights
Administrative simplification and support programmes may not diminish wages, social security, occupational safety, non-discrimination, consumer or environmental rights, privacy or data protection, or enable concealment of beneficial owners or the source of funds.
Chapter 2 — Governance and national coordination
Article (10) — Establishment of the Council
A “National Council for Entrepreneurship and Small and Medium Enterprises” shall be established as a coordination and policy council, not a new executive body. It shall report to the Council of Ministers and have its technical secretariat in the Ministry of Planning.
Article (11) — Council composition
The Minister of Planning shall chair the Council. It shall include appropriately senior representatives of the ministries of trade, finance, labour and social affairs, industry and minerals, agriculture, and higher education and scientific research; the Central Bank of Iraq; the Securities Commission; the National Investment Commission; and bodies responsible for competition, procurement, statistics and digital transformation.
The Council shall include, in an advisory capacity without regulatory decision-making rights, representatives of chambers of commerce and industry, banks, universities, incubators, entrepreneurs, professional organizations and labour organizations, with geographical diversity and participation by women and young people.
Article (12) — Council responsibilities
The Council shall propose national entrepreneurship and enterprise-development policy, approve proposed classification definitions for submission to the Council of Ministers, coordinate government programmes, review legislative barriers, adopt performance indicators, oversee the window and register, and prevent duplicate support programmes.
The Council shall not replace the powers of the Central Bank, Securities Commission, Companies Registrar or sectoral bodies, or issue financial or professional licences outside its competence.
Article (13) — Technical secretariat
The technical secretariat shall prepare agendas, studies, data and annual reports, manage institutional interconnection for the window and register, and follow up Council decisions. It may engage national and international expertise under public contracting rules without creating structures parallel to existing departments.
Article (14) — National policy
Every four years, the Council shall prepare a national entrepreneurship and small and medium enterprise policy containing an evidence-based assessment of the sector and informal economy, financing and skills gaps, productivity and market access. It shall define measurable priorities, responsibilities, funding sources and evaluation mechanisms.
Article (15) — Public consultation
Draft policies and general regulations with broad effects shall be published for at least thirty days of consultation. A summary of substantive comments and responses shall be announced, except in legally justified urgent cases.
Article (16) — Coordination with governorates
Governorates not incorporated into a region shall establish entrepreneurship focal points within existing structures, without creating independent bodies unless the law provides otherwise. They shall facilitate local data and services and address barriers within their competence.
Article (17) — Coordination with the Kurdistan Region
Implementation concerning the Kurdistan Region's powers shall follow the Constitution and applicable laws through coordination between federal and regional authorities. Classification and support-programme data may be exchanged through operational agreements respecting constitutional competences.
Article (18) — Prevention of duplicate support
Public bodies may not establish enterprise financing, grant or guarantee programmes outside this law's registration and information-exchange framework. Each body shall disclose its conditions, beneficiaries, amounts and outcomes within data-protection and banking-secrecy limits.
Chapter 3 — Classification, register and start-up status
Article (19) — National register
A digital national register for entrepreneurship and small and medium enterprises shall be established, technically linked to company registration, tax, social security and sectoral bodies. It does not replace the companies register or legally prescribed professional registers.
Article (20) — Enterprise classification
On the Council's proposal, the Council of Ministers shall issue a regulation classifying enterprises as micro, small or medium, based on a combination of employment, revenue or turnover, total assets and sector characteristics.
Numerical and financial thresholds shall be reviewed at least every three years. Different sectoral thresholds may be set where necessary, provided they are public and capable of automated application as far as possible.
Article (21) — Prevention of artificial fragmentation
Related enterprises or those under common control shall be treated as a single economic unit for classification if formal separation seeks support, exemption or preferential treatment. Common ownership, control, management, contracts and related-party transactions shall be considered.
Article (22) — Classification application
Classification and renewal applications shall be electronic and use available government data. An enterprise may not be required to supply a document already issued by a competent public body and digitally verifiable.
Article (23) — Classification certificate
A digital classification certificate shall specify category, effective date and validity period. It may establish eligibility for programmes, procurement and services without itself creating entitlement to finance or a grant.
Article (24) — Start-up status requirements
“Start-up” status shall be granted to an enterprise that: a) is registered under Iraqi law; b) is no more than five years old from commencement of actual commercial activity; c) innovates in a product, service, technology, process or business model, or demonstrates growth and scalability beyond conventional local activity; d) meets regulatory size or revenue limits; and e) does not result from an artificial division of an existing enterprise to obtain advantages.
The age limit may be extended by no more than two years for sectors with long research or approval cycles, according to criteria specified in the regulation.
Article (25) — Independence and control
Start-up status shall not be granted to an enterprise directly or indirectly controlled by an established large company, unless the ownership constitutes a financial investment by a venture capital fund, incubator, university or investment body that does not deprive the founders of operational control, within the limits specified in the regulation.
Article (26) — Procedures for granting status
Applications shall be submitted electronically. The competent authority designated by the regulation shall decide within fifteen working days of receiving complete information. Rejections shall state their reasons and be subject to administrative appeal. Failure to request additional information within five working days shall constitute a presumption that the application is complete.
Article (27) — Duration and renewal of status
Start-up status shall be granted for two years and renewed while the conditions continue to be met, within the maximum period prescribed in Article (24). Expiry of the status shall not terminate legal personality, contracts or lawfully acquired rights.
Article (28) — Withdrawal of status
Start-up status shall be withdrawn where materially false information has been submitted, its conditions cease to be met or benefits are misused. The enterprise shall be heard and the decision shall state its reasons. Unduly received support shall be recovered in accordance with the law, without prejudice to the rights of third parties acting in good faith.
Article (29) — Published information
The register shall publish basic information on the number of classified enterprises and start-ups, their geographical and sectoral distribution, employment and support programmes, in aggregated form that does not disclose trade secrets or protected personal data.
Article (30) — Interoperability
Public bodies shall adopt the unified enterprise identifier and secure data-exchange interfaces, and shall prohibit the creation of unnecessary parallel identifiers. Access to data shall be limited to the lawful purpose and the minimum necessary information, with access operations logged.
Chapter 4 — Registration, formalisation and the digital window
Article (31) — The national window
A unified national digital window for entrepreneurship services shall be established, combining guidance, registration, classification, programme applications and transaction tracking. It shall connect to existing government platforms rather than duplicate them.
Article (32) — The once-only data principle
A body participating in the window shall not require an entrepreneur to resubmit accurate information already available to it or to another public body where that information may lawfully be exchanged. Where integration is temporarily unavailable, a verifiable digital document shall be accepted.
Article (33) — Procedural roadmap
For each economic activity, the window shall publish an updated list of registrations, licences, fees, time limits, competent authorities and their legal basis. No fee may be collected or document required unless it appears on the official list, except pursuant to a provision of a law in force.
Article (34) — Registration assistance
The Ministry of Trade, in cooperation with the competent authorities, shall provide simplified procedures and standard forms for registering small enterprises under the Companies Law and related legislation. Digital assistance centres may be provided in the governorates for those unable to use electronic services.
Article (35) — Home-based economic activity
Local and sectoral authorities shall establish proportionate rules for low-risk home-based economic activities, taking account of safety, health and neighbours' rights. An activity shall not be prohibited solely because it is home-based if it presents no risk or nuisance exceeding the prescribed limits.
Article (36) — Voluntary transition to the formal economy
A time-limited transition programme may be established for unregistered activities, providing simplified registration, settlement of certain non-serious administrative violations and instalment payment of liabilities in accordance with the law, in return for accurate disclosure and entry into the tax and social security systems.
The programme shall not cover money laundering, corruption, fraudulent tax evasion or infringements of workers', consumers' or environmental rights, nor shall it waive the restoration of private rights.
Article (37) — Pre-incorporation services
The window shall provide free information on choosing a legal form, estimating costs and obligations, protecting a trade name, taxation, social security and employment, and the fundamentals of accounting and compliance. This service shall not constitute binding individual legal advice.
Article (38) — Administrative processing times
Participating bodies shall establish published service standards for transactions involving small enterprises and start-ups. The window shall periodically display actual completion times, the proportion of delayed transactions and the reasons for delay.
Article (39) — Risk-based licensing
The competent authorities shall review licences and periodic approvals with a view to moving low-risk activities, where permitted by law, from prior approval to notification or registration followed by subsequent inspection. Prior approval shall remain for activities affecting health, safety, security, the environment or the financial system.
Article (40) — Electronic identity, signatures and payments
The window shall adopt legally recognised electronic identification, signature and payment methods. Personal attendance shall not be required unless expressly prescribed by law or electronic verification is unavailable for substantiated reasons.
Article (41) — The right to non-digital access
Digital transformation shall not deprive anyone of registration because of disability, lack of digital skills or poor connectivity. In-person and telephone assistance channels and accessibility for persons with disabilities shall be provided in accordance with the adopted standards.
Chapter 5 — Business development services, incubators and innovation
Article (42) — Business development services
Public bodies shall coordinate programmes for mentoring, accounting, marketing, quality, digital transformation, exports, human resources management and compliance. Where necessary, they shall purchase these services from qualified providers in accordance with public procurement and competition requirements.
Article (43) — Accreditation of incubators and accelerators
A voluntary accreditation register may be established for incubators, accelerators and innovation centres wishing to manage publicly funded programmes. Accreditation shall be based on competence, governance, conflicts of interest and outcomes, and shall not be a prerequisite for conducting lawful private consultancy activities.
Article (44) — Funding public incubators
Funding for government or university incubators and accelerators shall be based on business plans, performance indicators and verifiable outputs. Funding shall not continue merely because a facility exists or has participants, without measuring enterprise survival and growth, employment and subsequent investment.
Article (45) — Partnerships with universities
Universities, institutes and research centres may, within the laws governing them, establish or participate in incubators, accelerators and spin-off companies. They may establish rules on conflicts of interest, sharing innovation returns and using public laboratories and equipment at published prices and on published terms.
Article (46) — Research spin-offs
The competent authorities shall facilitate the incorporation of companies arising from research and development results, while safeguarding intellectual property rights and public funds. The ownership of patents and licences shall remain governed by intellectual property law and valid contracts.
Article (47) — Service vouchers
Public programmes may award competitive vouchers of a specified value to purchase accredited accounting, design, testing, quality, digitisation or export services. Payment shall be made to the service provider after completion has been verified, and vouchers shall not be used as unconditional cash grants.
Article (48) — Mentoring programmes
Public bodies shall establish transparent rules for selecting mentors and experts and disclose conflicts of interest. A mentor shall be prohibited from exploiting confidential information or requiring a beneficiary to contract with the mentor or a related party.
Article (49) — Regulatory testing
A sectoral regulator may establish a time-limited regulatory sandbox for an innovative product or service within its jurisdiction, subject to safeguards for consumers, data, safety and financial stability. The Council shall have no authority to grant an exemption from sectoral legislation or override the regulator's powers.
Article (50) — Laboratories and shared infrastructure
Non-sensitive public laboratories, prototyping facilities and equipment may be made available to small enterprises under a fair fee schedule and transparent priority rules, provided that this does not displace the facility's original function or confer an unjustified selective advantage.
Chapter 6 — Finance, investment and guarantees
Article (51) — Principles of public finance
Public financing programmes shall address a demonstrated market gap and shall not compete with commercial credit normally available in the market. Programme conditions, risks, fiscal cost, ceiling, duration, selection criteria, default rates and recovery rates shall be disclosed.
Article (52) — The role of the Central Bank
The Central Bank of Iraq shall exercise its statutory powers to regulate banks, financing and payment companies, and financial inclusion. This Law shall not oblige it to finance a deficit, lend directly to an enterprise or assume a financial obligation belonging to the public treasury.
Article (53) — Lending programmes
Licensed banks and financing companies may offer products for enterprises, including working capital, equipment and invoice financing, leasing and Islamic finance, in accordance with Central Bank rules and the requirements of lending, financial consumer protection and anti-money laundering.
Article (54) — Credit guarantees
The Council of Ministers may, on a proposal from the Ministries of Finance and Planning and in coordination with the Central Bank, establish a national credit guarantee programme implemented through a licensed body or a qualified existing legal entity. It shall cover part of a loan's risk and shall not replace the bank's credit assessment.
The regulation shall specify coverage ratios, loss limits, fees, recovery, risk-sharing and guarantee governance. Full-loan guarantees shall be prohibited except in exceptional social cases provided for by law and the budget.
Article (55) — Cash-flow-backed financing
Within the law, regulators shall encourage the use of invoices, contracts, cash flows, movable assets and credit information as assessment factors instead of relying exclusively on real estate. No security interest in property shall be created except under legislation in force.
Article (56) — Exchange of credit information
Financial institutions may use credit information and other data permitted by law to assess enterprises. Data subjects shall have the right to access, correct and challenge inaccurate information. A significant credit decision shall not be made automatically without an explanation or human review where the law so requires.
Article (57) — Venture capital funds
The Securities Commission, within its jurisdiction and in coordination with the Central Bank where necessary, shall regulate venture capital and private equity funds investing in start-ups, including disclosure, investor protection, valuation, conflicts of interest, asset custody and exit arrangements.
Article (58) — Investment crowdfunding
Securities or investment interests shall not be offered to the public through a crowdfunding platform except under a regulation issued by the Securities Commission specifying licensing, issuance limits, disclosure, investor protection, segregation of client funds and fraud prevention.
Article (59) — Loan crowdfunding and payments
Crowdfunding involving lending, holding or transferring funds, or payment services shall be supervised by the Central Bank within its jurisdiction. An unlicensed platform shall not accept deposits, guarantee returns or conduct banking activities.
Article (60) — Employee equity-based financing
Start-ups may adopt share- or equity-based incentive plans for employees and founders where their legal form permits, in accordance with company, securities, tax and labour law, with clear disclosure of vesting conditions, dilution and risks.
Article (61) — Public grants
Non-repayable assistance shall be awarded through announced competition, in stages linked to milestones. Limited advance payments may be made where necessary with appropriate safeguards. Grants based on personal recommendations or undisclosed closed lists shall be prohibited.
Article (62) — Preventing overlapping support
An applicant for financing or a grant shall disclose public support already received for the same purpose. The window shall enable funding bodies to check for duplication. Different instruments may be combined where they are complementary and disclosed and do not finance the same expense twice.
Article (63) — International financing
Grants, credit lines and guarantees from international and development institutions may be accepted in accordance with the laws and budget. Obligations, fees, currency risks and any sovereign guarantee shall be recorded. The State shall not provide an implicit guarantee merely because an international institution participates.
Article (64) — Restructuring and financial distress
Financing programmes shall maintain policies for early management of financial distress and rescheduling for viable enterprises. Insolvency and settlement procedures shall apply under the relevant law. Good-faith business failure shall not be criminalised or treated as fraud unless the legal elements of fraud are established.
Chapter 7 — Market access, procurement and supply chains
Article (65) — Public procurement
Public procurement shall observe rules enabling small and medium-sized enterprises to participate. These include dividing contracts into suitable lots where economically justified, making experience and financial standing requirements proportionate to contract size, and accepting electronic guarantees and documents in accordance with public procurement and government contract law.
Article (66) — No unfunded mandatory quota
No compulsory share of contracts shall be reserved for enterprises solely because of their size unless prescribed by procurement law or a regulation issued on the basis of an impact and competition assessment. The aim shall be to broaden competition, not replace it or unjustifiably increase costs to the State.
Article (67) — Innovation in procurement
Contracting authorities may use innovation challenges, pilot procurement, competitive dialogue or phased contracts where procurement law permits. Requirements shall be expressed in terms of functions and outcomes, rather than specifications tailored to a particular supplier.
Article (68) — Payments to suppliers
Public bodies shall adopt published payment deadlines and shall not use small enterprises to finance the treasury by delaying payments due. The interest, compensation for late payment and safeguards prescribed in applicable procurement and contract law shall apply.
Article (69) — Supply chains
Economic authorities shall connect qualified enterprises to the supply chains of large companies and investment projects through databases, procurement fairs and quality programmes, without imposing local purchasing requirements that conflict with Iraq's international obligations or harm competition and efficiency.
Article (70) — Digital markets
The State shall facilitate enterprises' use of e-commerce and lawful marketplace platforms. Consumer protection, tax, customs, data, cybersecurity and intellectual property requirements shall apply on the same basis as to traditional activities.
Article (71) — Exports
The competent authorities shall provide enterprises with services covering export information, certificates of origin, standards, conformity, customs procedures, financing and export insurance where available. These services shall observe the rules of the World Trade Organization and agreements to which Iraq is a party when they enter into force.
Article (72) — International fairs and platforms
Support for participation in fairs and trade missions shall follow published criteria covering readiness, production capacity, market plans and expected impact. A report shall be published on results and, as far as possible, the contracts or export opportunities secured.
Chapter 8 — Compliance, labour, social security, taxation and proportionate regulation
Article (73) — Graduated compliance
The competent authorities shall develop simplified compliance guides for small enterprises. A non-serious administrative penalty shall ordinarily be preceded by notice and a reasonable opportunity to remedy the violation, unless there is imminent danger, fraud or deliberate repetition.
Article (74) — Decent work
Small enterprises and start-ups shall not be exempt from statutory minimum wages, working hours, occupational safety and health, non-discrimination, regulation of employment relations or trade union rights. Record-keeping and reporting forms may be simplified without reducing substantive protection.
Article (75) — Social security
An enterprise shall register its workers in social security systems in accordance with the law. The window shall integrate technically with the social security authority to facilitate registration and payment. A worker's waiver of social security shall not be required as a condition for obtaining financing or a benefit.
Article (76) — Tax simplification
The tax administration shall design simplified accounting forms and tax returns for smaller categories in accordance with tax legislation, while retaining necessary invoices and records and preventing the simplified system from being used to conceal a large enterprise or related parties.
Article (77) — Government fees
Public bodies shall review fees that burden entry into the formal economy. Incorporation or licensing fees for small enterprises may be reduced by a decision based on fee legislation and the cost of the service. Reductions shall be general, published and specified, rather than negotiated.
Article (78) — Risk-based inspection
Supervisory bodies shall coordinate inspections as far as possible and exchange their findings within the law. They shall rely on risk levels and compliance history rather than frequent routine visits. Immediate inspection shall remain possible in response to serious complaints or health and safety risks.
Article (79) — Groups with limited access
Public programmes may design additional assistance windows for women, young people, persons with disabilities, displaced persons and underserved areas where data demonstrate an access gap. Their criteria shall be published and shall not be based on favouritism or unlawful discrimination.
Article (80) — Sustainability and resilience
Support programmes shall incorporate energy efficiency, risk management, business continuity, insurance and disaster adaptation principles where proportionate to the activity. Environmental requirements or reporting beyond those prescribed by sectoral legislation shall not be imposed except as an explicit condition of an optional financing programme.
Chapter 9 — Data, transparency, integrity and evaluation
Article (81) — The national database
The Ministry of Planning shall manage an analytical database on enterprises and entrepreneurship through links to official sources. It shall separate public policy data from confidential supervisory data. The database shall not be used for unlawful purposes or marketed commercially.
Article (82) — Protection of data and secrets
Personal and credit data and trade secrets shall be protected under applicable laws. Access within the window shall be restricted to authorised employees and systems. Access and modification operations shall be logged and subject to security audits.
Article (83) — Beneficial ownership
Start-ups and enterprises organised as companies shall comply with beneficial ownership disclosure requirements under company and anti-money laundering law. Small-enterprise status shall not exempt them from this obligation.
Article (84) — Publication of support programmes
Each government body shall publish on the window the programme's name, legal basis, budget or ceiling, conditions, selection mechanism, implementing bodies, application period and aggregate results. The names of recipients of public grants and contracts shall be published to the extent permitted by law.
Article (85) — Disclosure of evaluation
Each major publicly funded programme shall have an evaluation framework specifying a baseline, indicators, intended outcomes and a measurement methodology. Programmes exceeding the financial thresholds set by the Council of Ministers shall undergo periodic independent review.
Article (86) — Performance indicators
Depending on the programme, indicators shall include enterprise survival, revenue growth, productivity, formal employment, women's and young people's share of access, default rates, subsequent private investment, exports, and the cost to public funds per job or outcome.
Article (87) — Annual report
The Council shall submit a public annual report to the Council of Ministers and the Council of Representatives covering the sector's development, registration levels, financing and support programmes, results and defaults, legislative obstacles, recommendations and fiscal implications.
Article (88) — Conflicts of interest
Members of selection, evaluation and management committees shall disclose their interests and relationships with applicants. A member shall abstain from participation where a direct or indirect interest exists. A benefit arising from concealment of a material conflict shall be invalidated, with due regard for the rights of third parties acting in good faith.
Article (89) — Prohibition of unofficial intermediaries
An employee, contractor or intermediary shall not receive money or a benefit to expedite or guarantee classification, financing, a grant or a licence. Exclusive "follow-up offices" not provided for by law shall not be interposed between an enterprise and a public body.
Chapter 10 — Administrative appeals, oversight, liability and penalties
Article (90) — Administrative appeal
An enterprise whose application for classification, status or a support programme has been rejected shall have the right to lodge an electronic administrative appeal within thirty days of notification. A body or committee that did not participate in the original decision shall determine the appeal within thirty days by a reasoned decision.
Article (91) — Judicial appeal
An administrative appeal shall not prejudice the right to challenge the decision before the competent courts in accordance with the law. Waiving that right shall not be a condition for receiving public support or financing.
Article (92) — Complaints
The window shall provide a channel for complaints concerning delay, corruption, conflicts of interest, discrimination or misuse of data, with a tracking number, protection of the reporter's identity within the limits prescribed by law, and referral of criminal matters to the competent authorities.
Article (93) — Administrative violations
Without prejudice to any more severe penalty, breach of the conditions of a benefit may result in a warning, suspension or withdrawal of start-up status, temporary exclusion from support programmes or recovery of the benefit. Penalties shall be proportionate, reasoned and subject to appeal.
Article (94) — False information
Where a person deliberately obtains financing, a grant, a guarantee or a public preference through forged information or material concealment, the benefit and lawful interest or returns shall be recovered. The conduct shall be referred to the investigating authority where there are grounds to suspect an offence. Criminal intent shall not be presumed from a minor accounting error.
Article (95) — Employee liability
An employee who manipulates classification, selection or data, requests a benefit or discloses a trade secret shall be subject to disciplinary, civil and criminal liability under applicable laws. Internal instructions shall not prevent the application of integrity and criminal legislation.
Article (96) — Recovery of public funds
The funding body shall establish procedures for recovering unduly received support and rescheduling repayment where necessary. It shall distinguish fraud from good-faith business failure and changed circumstances. An obligation may be restructured where this improves recovery and preserves a viable enterprise.
Article (97) — Audit
State-funded support, guarantee and grant programmes shall be subject to oversight by the Federal Board of Supreme Audit and the competent supervisory bodies. Auditors shall have access to necessary records while respecting banking and commercial confidentiality in accordance with the law.
Chapter 11 — Financial, transitional and final provisions
Article (98) — Public funding
Government obligations arising under this Law shall be financed from approved annual appropriations and lawful grants and contributions. The Law shall not in itself create an open-ended obligation, sovereign guarantee or fund capital without a budget appropriation.
Article (99) — Implementation cost
Within one hundred and eighty days, the Ministries of Planning and Finance shall prepare a three-year cost plan covering digital integration, training, programme management and proposed guarantees. It shall identify what can be implemented from existing resources and what requires new appropriations. A summary of costs and assumptions shall be published.
Article (100) — First phase
Within ninety days of this Law entering into force, the Council shall be formed and its technical secretariat designated. Within one hundred and eighty days, the regulation on classification, start-up status and administrative appeal procedures shall be issued.
Article (101) — Second phase
Within two hundred and seventy days, the national register and the first version of the window shall be launched, linked to the Companies Registrar and priority authorities. Integration with taxation, social security, financing and other bodies shall be completed in stages within eighteen months.
Article (102) — Existing programmes
Within one year, government bodies shall review existing financing, grant and incubator programmes, link them to the register and determine which should continue, merge or end. An existing programme with a valid legal basis and funding shall not be suspended during the review except by a reasoned decision.
Article (103) — Existing rights and applications
The entry into force of this Law shall not affect acquired rights or valid prior contracts, loans and approvals. Applications submitted before its entry into force shall be completed under the rules previously in force, unless the applicant requests the new rules and these are more favourable to the applicant without affecting a third party's rights.
Article (104) — Relationship with the Companies Law
Within one year, the Ministry of Trade shall propose any amendments or instructions needed to simplify the incorporation and management of small enterprises under the Companies Law, particularly electronic forms, meetings and proportionate disclosures, without diminishing legal personality, creditor protection or beneficial ownership requirements.
Article (105) — Relationship with financing laws
Within one year, the Central Bank and the Securities Commission, each within its jurisdiction, shall review the need for rules on crowdfunding, venture capital, invoice financing and digital financial services. Expiry of that period shall not constitute automatic licensing of an unregulated financial activity.
Article (106) — Regulations and instructions
The Council of Ministers shall issue the regulations necessary to implement this Law. Each authority shall issue instructions within its jurisdiction after coordinating with the Council. Instructions shall not create a fee, offence, tax exemption or restriction on ownership without a basis in law.
Article (107) — Removal of conflicting provisions
Any provision of lower legal rank expressly conflicting with this Law shall be repealed to the extent necessary to remove the conflict. This shall not be construed as repealing the Law on Support for Small Income-Generating Projects, the Companies Law or the powers of sectoral regulators.
Article (108) — Entry into force
This Law shall enter into force ninety days after its publication in the Official Gazette. That period shall be used to complete the initial regulations and institutional integration and prevent interruption of existing services.
Statement of reasons
For the purpose of developing the private sector, broadening the base of productive enterprises and encouraging entrepreneurship and innovation; unifying the definition and classification of micro, small and medium-sized enterprises; regulating start-up status; facilitating registration and transition to the formal economy; improving access to finance, markets, procurement and services; coordinating public programmes and preventing duplicate support and favouritism; while preserving the powers of supervisory bodies and special laws and protecting workers' and consumers' rights and public funds, this Law has been enacted.
Explanatory memorandum
1. Why a new law rather than an expanded lending law?
Law No. (10) of 2012 was designed principally as an employment and lending law for specified groups under the Ministry of Labour. Modern entrepreneurship extends beyond lending to registration, innovation, venture capital, procurement, exports, data and digital finance. Expanding that special law to govern all these matters would assign the Ministry of Labour responsibilities outside its proper remit and create conflicts with the Ministry of Trade, the Central Bank and the Securities Commission. The special law therefore remains within its own field, while POL-46 provides a general framework across the various programmes rather than replacing them.
2. Why does the law not establish an independent "national authority"?
Iraq's problem in this field is the multiplicity of bodies, not their absence. The Ministry of Trade registers companies, the Ministry of Labour manages a loan fund, the Ministry of Planning leads national policy, the Central Bank regulates finance and the Securities Commission regulates capital markets. Establishing a new authority to implement everything would require transfers of powers, employees and budgets and add another layer of approvals. The proposed Council coordinates and unifies data and policy, while implementation remains with the competent institution.
3. A start-up is a status, not a new legal form
A start-up may adopt any legal form permitted by the Companies Law. This Law does not create a parallel type of company outside the Companies Registrar's framework; it adds a time-limited "status" linked to innovation and growth potential. This allows appropriate services or financing instruments to be offered without rewriting the Companies Law within this Law, and prevents a mature enterprise from remaining indefinitely under the "start-up" umbrella.
4. Incentives are not open-ended exemptions
Broad tax exemptions are easy to announce and difficult to control. They may encourage established companies to reincorporate or split themselves up. The proposal therefore confines itself to principles and simplification, leaving taxation to tax-system legislation. Similarly, it does not set a mandatory procurement share; it removes barriers preventing enterprises from competing, such as large undivided contracts and disproportionate experience and guarantee requirements.
5. Finance: from lending to a market with multiple instruments
The proposal distinguishes credit regulated by the Central Bank from investment regulated by the Securities Commission. Lending suits enterprises with predictable cash flows, whereas venture capital suits ventures that may fail or grow rapidly. Crowdfunding can broaden access but carries substantial fraud risks; the Law therefore does not permit public crowdfunding before rules on licensing, disclosure and segregation of investor funds are issued.
6. Transition to the formal economy
Iraq's recent experience with the business registration guide and the development of a strategy for transition to the formal economy confirms that penalties alone do not make registration effective. A small enterprise needs a simpler process and a clear benefit from registration: a bank account, financing, a formal contract, social security for workers and the opportunity to grow. At the same time, formalisation must not become an amnesty for money laundering, fraud or labour violations. It is therefore limited to minor administrative violations and requires accurate disclosure.
7. Preventing the "stay small" trap
Incentives based on a sharp numerical threshold may lead an owner to avoid hiring an eleventh worker or increasing sales for fear of losing benefits. The proposal addresses this risk through classification using multiple indicators, periodic review, separation of "start-up" from "small enterprise" status, and the possibility of regulations establishing gradual transition periods rather than cutting off all services immediately when a single threshold is crossed.
Legislative alignment
| Legislation/body | Relationship with POL-46 | Rule preventing conflict |
|---|---|---|
| Companies Law No. 21 of 1997, as amended | Remains the source of legal forms, incorporation and governance rules | "Start-up" status does not create a company outside the Companies Law. |
| Law on Support for Small Income-Generating Projects No. 10 of 2012, as amended | Remains a special lending and employment programme | Its definitions apply to its own programme; the general classification is used for other policies. |
| Central Bank law and financial regulations | Regulate banks, finance and payments | The Council is not authorised to license financial activities or oblige the Central Bank to provide funding. |
| Securities Commission | Regulates venture capital and public investment offerings | Investment crowdfunding begins only after the Commission regulates it. |
| Tax laws | Govern tax simplification and incentives | POL-46 does not create an automatic tax exemption. |
| Labour and social security law | Protects workers and determines coverage | Simplification does not reduce substantive rights. |
| Public procurement and government contract law | Governs public contracts | POL-46 establishes access and proportionality principles, leaving percentages and procedures to the relevant law. |
| Insolvency/bankruptcy law | Addresses failure and restructuring | POL-46 does not create a parallel insolvency system. |
| Intellectual property law | Protects innovation and licensing | POL-46 facilitates spin-offs without rewriting patent and trademark rights. |
Financial and Implementation Implications
The proposal does not set an assumed figure for a fund or lending programme. The scale of any guarantee, grant or service-voucher programme must be determined in the budget after estimating beneficiary numbers, the market gap and risk levels. This is more disciplined than placing a large capital amount in the text of the Law and then leaving it unfunded or outdated.
The Law's principal fixed costs concern digital integration, the register and window, the Council's secretariat, database development and training for participating bodies. These can be reduced by reusing the company registration platform and government digital infrastructure rather than building a separate system. Guarantees, grants and incubators involve variable programme costs that arise only after an appropriation has been approved.
Article (99) requires the Ministries of Planning and Finance to prepare a three-year cost model within 180 days. The model must distinguish one-off establishment and digital integration costs; annual operating costs; contingent credit guarantees, which do not equal the value of the loans guaranteed; actual grants and vouchers; resources reused from existing programmes; and international contributions or grants. Default risks and contingent liabilities must also be explicitly accounted for in financial reports.
Comparative framework
The proposal draws on three international strands without copying a foreign model verbatim. The first is International Labour Organization Recommendation No. (204) on the transition from the informal to the formal economy, which links simpler registration and incentives to rights, social security and compliance. The second is UNCITRAL guidance for micro, small and medium-sized enterprises, particularly on business registries, simplified forms and access to credit. The third is experience with "start-up acts" granting time-limited status under clear criteria, including Tunisia's experience since 2018.
The proposal deliberately differs from some start-up laws in one respect: it does not make tax exemptions the centrepiece. Iraq's legal and fiscal environment first requires sound registration, data, financing and competition arrangements and the prevention of institutional duplication. Once the register is established and data on start-up performance are available, any specific tax incentive can be assessed under tax law on the basis of its cost and outcomes.
Sources and references
- Constitution of the Republic of Iraq — Iraqi Council of RepresentativesArticles 25 and 26 on economic reform and encouragement of the private sector and investment, together with the relevant general constitutional principles.
- Companies Law No. (21) of 1997, as amended — Ministry of JusticeThe general framework for company incorporation and management.
- Iraqi Gazette, Issue 4554 — Law No. (17) of 2019 amending the Companies LawConfirmation of the amendment to the Companies Law in force.
- Ministry of Justice — Adoption of a standard simple partnership agreement in notary officesA 2025 measure to standardise and simplify notarisation of simple partnership agreements under Article 183 of the Companies Law.
- Law on Support for Small Income-Generating Projects No. (10) of 2012 — Iraqi Legislation DatabaseThe existing special law governing the project support and lending fund, which remains in force.
- Iraqi Gazette, Issue 4728 — Law No. (14) of 2023The first amendment to the Law on Support for Small Income-Generating Projects.
- Iraqi Gazette, Issue 4838 — Instructions No. (2) of 2025Instructions facilitating implementation of the Law on Support for Small Income-Generating Projects.
- Companies Registration Department — Ministry of TradeThe company registration and digital services platform.
- International Labour Organization — Guide to Registering Small Businesses in Iraq, 2025A practical guide launched with the Ministry of Trade to simplify registration and encourage transition to the formal economy.
- Ministry of Planning — Development of the National Policy for Small and Medium-Sized Enterprise Development, 2025Confirmation of a government process to develop a national policy and address financing, legislative and institutional challenges.
- Ministry of Planning — Supporting entrepreneurship with the World Bank, 5 July 2026Confirmation of continued work on the business environment and entrepreneurship and on addressing legal and regulatory barriers.
- International Labour Organization — Iraq advances towards a national strategy for transition to the formal economy, 2 September 2026A recent reference connecting registration, social protection, productivity and national policy.
- Central Bank of Iraq — National Bank Lending Strategy 2024–2029The national framework for developing bank credit.
- Central Bank of Iraq — Enterprise Financing Guide, 17 August 2025Facilitating access to financing for medium-sized, small and micro enterprises.
- Central Bank of Iraq — Strengthening financing initiatives for micro, small and medium-sized enterprises, 9 July 2026Confirmation of expanded liquidity, rules and simplified access to finance.
- Central Bank of Iraq — Supervision of non-bank financial institutionsRules for companies financing medium-sized, small and micro enterprises and other non-bank activities.
- Iraq Securities Commission — About the CommissionIdentification of the Commission's mandate to regulate capital markets and protect investors.
- Securities Commission — Strategy 2026–2028Recent direction towards completing the legislative and regulatory framework and developing capital-market instruments.
- UNCITRAL — Legislative Guide on Limited Liability Enterprises (2021)A comparative reference on simplified legal forms and the entry of small enterprises into the formal economy.
- UNCITRAL — Micro, Small and Medium-sized EnterprisesInternational references on business registries, access to credit, limited liability enterprises and simplified insolvency.
- ILO Recommendation No. 204 — Transition from the Informal to the Formal EconomyAn international framework for simplifying registration while preserving workers' rights, social security and compliance.
- Startup Tunisia — Startup ActComparative experience in granting temporary legal status to start-ups and linking it to specific criteria and incentives.
Legal and institutional sources available up to the document's update date were consulted. Comparative references do not replace Iraqi legislation in force or the constitutional jurisdiction of Iraqi authorities.
Ali Zuweid Political Programme · POL-46 · Version 1.0