Hiring in Iraq: Complete Guide 2027
Everything you need to know about hiring and managing employees in Iraq
Overview
Iraq runs two payroll systems. In federal Iraq, Law No. 18 of 2023 takes 5% of pay from the employee and 12% from the employer, 25% where profits come from oil exports, and income tax runs from 3% to 15% after allowances. The Kurdistan Region (KRI) still applies Law No. 39 of 1971 at the same 5% and 12% and taxes salaries at a flat 5% above IQD 1,000,000 a month. Minimum wages differ too: IQD 350,000 federally, IQD 450,000 in the KRI. On a $2,000 monthly salary, 12% plus a $600 fee adds about 42%.
Currency
Primary Language
Payroll Tax
Pay Frequency
Overview
Employer Costs
Employer Social Contributions
Mandatory Benefits
EOR Service Fee
Total Additional Cost
Employee Deductions
Income Tax
Employee Social Contributions
Mandatory Employee Benefits
PAYROLL & SETUP
Setting Up Payroll in Iraq
Payroll runs monthly in dinars, and the first step is choosing the system. A federal employer registers with the Ministry of Trade, the General Commission for Taxes and the federal social security department; in the KRI the same files sit with the Kurdistan Regional Government (KRG) in Erbil. Under federal Law No. 18 of 2023 the employee pays 5% of wages and allowances and the employer 12%, or 25% for businesses whose profits come from Iraqi oil exports. Outside oil the state adds 8% for Iraqi staff; for a registered foreign worker the employer pays it, plus a one-time IQD 2,000,000 fee. Federal income tax is 3%, 5%, 10% and 15% on annual bands up to and above IQD 1,000,000, after allowances of IQD 2,500,000 (single) or 4,500,000 (married). The KRI applies 5% and 12% under Law No. 39 of 1971 and a flat 5% tax above IQD 1,000,000 a month. Minimum wage: IQD 350,000 a month, 450,000 in the KRI. The EOR withholds tax and contributions every month.
Key Labor Laws &
Requirements
Employment Contracts
- Federal Iraq or the KRI: separate tax and social security files
- Minimum wage IQD 350,000 a month, IQD 450,000 in the KRI
- Foreign hires need a work permit and residence first
Leave & Time Off
- Paid annual, sick and maternity leave under the Labour Law
- Ask the EOR to cite the leave terms in the contract
- The KRG sets its own public holidays in the KRI
Termination Rules
- Federal law: 30 days' notice after a probation of up to 3 months
- End-of-service pay: 2 weeks' wages per year of service (federal law)
- A foreign hire's permit and residence end with the job
COMPLIANCE
Federal Iraq or Kurdistan: Registration, Permits and Iraqization
In Iraq the job's location and the employer's registration decide the paperwork. A company registered in Erbil for staff in the Kurdistan Region reports to the KRG tax and social security offices and pays the KRI minimum wage; one in Baghdad, to the federal offices. Ask which applies first. A foreign hire needs a work permit and residence from the region where the job is, and in federal Iraq a social security registration with its one-time fee. Iraqization rules require a share of Iraqi staff in many sectors, set by sector and contract: get it in writing. The KRG is drafting its own private-sector social security law. Notice and end-of-service pay follow the Labour Law and the contract. On energy sites, security and access belong in the quote.
Figures checked against official sources: Ministry of Justice (Worker Retirement and Social Security Law No. 18 of 2023); General Commission for Taxes (Income Tax Law No. 113 of 1982, Instructions No. 1 of 2007); Council of Ministers (minimum wage, Labour Law No. 37 of 2015); Kurdistan Parliament and Kurdistan Regional Government. Checked November 2026.
Key Challenges
- Two systems: federal Iraq and the Kurdistan Region (KRI) register, tax and insure employers separately
- Iraqization: many sectors and contracts require a share of Iraqi staff
- Foreign hires need a work permit and residence from Baghdad or Erbil, plus a one-time IQD 2,000,000 social security fee in federal Iraq
- Businesses whose profits come from Iraqi oil exports pay 25% employer social security under federal Law No. 18 of 2023
- Site security and access on energy projects, with dinar payroll funded from dollars
Country Highlights
Advantages
- Employer social security of 12% in most sectors, the same rate in Baghdad as in Erbil
- Income tax tops out at 15% federally; the KRI taxes salaries at a flat 5% above IQD 1,000,000 a month
- Minimum wage of IQD 350,000 a month, IQD 450,000 in the KRI
- Oil companies and aid agencies in Basra, Baghdad and Erbil hire Iraqi staff
- UTC+3 all year, one or two hours ahead of Paris and Berlin
Popular Industries & Roles
Technology
Avg. Salary: IQD 12M-36M
Indicative band for Iraqi software, telecom and data staff working for private employers in Erbil and Baghdad.
Oil & Gas
Avg. Salary: IQD 15M-45M
Indicative band for Iraqi engineers and technicians on the oil fields around Basra and in the Kurdistan Region.
NGOs & Development
Avg. Salary: IQD 12M-30M
Indicative band for national staff of UN agencies and international NGOs in Erbil and Baghdad, in programme and finance roles.
Top 3 Providers in Iraq
Based on our analysis of pricing, compliance record, service quality, and customer reviews
mselect
- Iraq / MENA EOR + workforce solutions
- 13 years; 4 Iraq offices
- IBBC member; energy, engineering, NGO
- Visa, Huawei, Mercy Corps and UN agency clients
Shull Solutions
- Iraq + Kurdistan EOR, Erbil-based
- Federal Iraq + KRI dual framework
- ISO 9001:2015 and GDPR badges on its site
- 80/20 Iraqization quota management
Levant Outsourcing
- Jordan / MENA HR outsourcing + EOR
- 7 countries; regional multinational base
- Philip Morris, PepsiCo, GSK clients
- Visa, payroll and medical insurance services
Frequently asked questions
Hiring in Iraq through an EOR, in short.
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How much does an employer pay on top of salary in Iraq?
Employer contributions in Iraq come to 12–25%; the largest mandatory line is Social security 12%. With the other statutory benefits and a typical EOR fee, budget ~25–60% on top of gross salary.
What does an EOR charge per employee in Iraq?
Published EOR fees in Iraq run $599–699/mo per employee per month, with any setup fee negotiated separately. The fee is flat, so it weighs less as the salary rises.
What does an employee in Iraq pay in tax and contributions?
Income tax is 3–15% (KRI 5% flat) and employee social contributions are 5% (5% social security), both withheld by the employer on every pay run.
How long does it take to hire through an EOR in Iraq?
3-7 Days (local hires) once the employee's documents are in. The contract is issued by the EOR's local entity and payroll runs on the local cycle (Monthly).
Which EOR providers rank best in Iraq?
mselect, Shull Solutions and Levant Outsourcing hold the first three places in our ranking for hiring in Iraq. The full top 10, with the questions to put to each provider before signing, is here: Top 10 EOR providers in Iraq.
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