The US-backed Iraqi finance minister yesterday announced a sweeping package of economic reforms to open his country up to foreign investment, allowing 100-percent foreign ownership in all sectors except oil.
The measures concern Iraq's foreign direct investment code, its banking sector and the country's tax and tariff regime.
"The measures will be implemented in the near future and represent important steps in advancing Iraq's reconstruction effort," interim finance minister Kamel al-Kilani said in a statement released by the US delegation to the IMF meetings in Dubai.
They will "significantly advance efforts to build a free and open market economy in Iraq, promote Iraq's future economic growth and accelerate Iraq's reintegration into the international economy," he added.
Under the reforms, foreign companies will be able to buy Iraqi firms outright, forge joint ventures with Iraqi partners and open branches in the country.
One hundred-percent foreign ownership will be allowed "in all sectors except natural resources", the statement said.
The reforms also allow foreign banks to enter Iraq, with a total of six foreign banks allowed to buy up to 100 percent of local banks within the next five years.
The first two foreign banks in Iraq will benefit from a fast-track entry process, while after five years there will be no limits on foreign bank entry into the country, the minister's statement said.
The reforms also hand the Iraqi Central Bank full legal and operational autonomy.
A senior US official at the Dubai meetings said the new regulations were decreed on Saturday by the US overseer in Iraq, Paul Bremer.
Kilani, meanwhile, met US Treasury Secretary John Snow at the International Monetary Fund meeting in Dubai, United Arab Emirates yesterday.
The reforms were agreed following discussions between the Iraqi governing council and the coalition occupying Iraq.
Iraqis will continue to be exempt from income tax until the end of this year, but taxes will be levied on hotels, restaurants, petrol use and the transfer of motor vehicles.
From January 1 next year, both individuals and companies will have to pay a maximum tax rate of up to 15 percent on income.
The authorities have also agreed to impose a five-percent flat "reconstruction surcharge" on all imports, although humanitarian goods will be exempted from the charge.
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