Benefits of Making Business in Iraq | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN IRAQ WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN IRAQ WWW.MERGERSCORP.COM

4. Country Overview Iraq, a country in Western Asia, is bordered by Jordan to the west, Syria to the northwest, Turkey to the north, Iran to the east, and Kuwait and Saudi Arabia to the south. Iraq is divided into 18 governorates, with Baghdad as the capital. Iraq’s topography can be divided into four physiographic regions: the alluvial plains of the central and southeastern parts of the country; Al-Jazīrah(Arabic: “the Island”), an upland region in the north between the Tigris and Euphrates rivers; deserts in the west and south; and the highlands in the northeast. Iraq is predominantly a Muslim country, in which the two major sects of Islam are represented more equally than in any other state. About three-fifths of the population is Shiʿi, and about two- fifths is Sunni.

5. Executive Summary The official languages of Iraq are Arabic and Kurdish, and the currency is the Iraqi dinar (IQD). Major Cities (in order of population size) are : Baghdad, Mosul (Al Mawsil), Basra (Al Basrah), Arbil (Irbil), Kirkuk, and Sulaymaniyah (As Sulaymaniyah). Iraq, with a population of 15.9 million, is blessed with vital natural resources, oil being its chief export product, as well as barley, dates, and wheat. Fertile land and unlimited supplies of water give it enormous productive potential.

6. Introduction – Doing business in Iraq Ease of Doing Business in Iraq averaged 161.17 from 2008 until 2019, reaching an all time high of 172 in 2019 and a record low of 150 in 2008. Oil dominates the Iraqi economy, accounting for 95% of the country’s foreign exchange, but capital flows have created space for other sectors like construction or retail services to grow as well. Public spending is also on the rise. Iraq is emerging as one of the top consumer markets. A study highlighted the growth potential in the following markets from 2018 to 2022 - Grains, Food & Beverages (8-10% CAGR), Pharmaceuticals (10-12% CAGR), Beauty and Personal Care (8-10% CAGR), Furniture and Home wares (5-6% CAGR), Footwear, Textile and Apparel (5-6% CAGR), Consumer Electronics (7-8% CAGR) and Plastic Products (9-10% CAGR).

7. Conducting business in Iraq The most commonly registered business entities in Iraq are : • The Iraqi Limited Liability Company •Branch Office •Representative Office •The Iraqi Joint Stock Company •Joint Venture Company\ You can file for registration at the Commercial Registry. This will take 14 days. The charges to be paid will be between IQD 250,000 – 350,000 And then you can obtain the registration certificate. This will take 1 day and the associated costs are included under procedure 4. And if you apply for a trade license, this will take anything between 30 to 60 days. The associated costs will be IQD 200,000.

8. Taxation in Iraq All income derived from Iraq is subject to tax in Iraq, regardless of the residence of the recipient. The Personal Income Tax Rate in Iraq stands at 15 percent. The effective corporate income tax (CIT) system presented in Iraq for juristic persons (except partnerships) is based on a statutory CIT rate of 15% at all income levels, with no progressive tax rate scale. State sales and service tax (ICMS): normally around 18% to 20% (lower rates apply to inter-state transactions). Combined federal and provincial/territorial sales taxes range from 5% to 15%.

9. Trade Iraq is the 43rd largest export economy in the world. In 2017, Iraq exported $60.8B and imported $29.7B, resulting in a positive trade balance of $31B. In 2017 the GDP of Iraq was $192B and its GDP per capita was $16.9k. The top exports of Iraq are Crude Petroleum ($57.5B), Refined Petroleum ($1.47B), Gold ($1.4B), Petroleum Gas ($92.5M) and Tropical Fruits ($66.7M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Jewellery ($960M), Packaged Medicaments ($677M), Poultry Meat ($643M), Cars ($629M) and Gold ($621M).

10. Banking in Iraq The Iraqi Central Bank, more formally the Central Bank of Iraq (CBI), is the national central bank of Iraq. As such, it is responsible for domestic monetary policy management as well as supervision of the financial system. It was established as Iraq's independent central bank by law on March 6, 2004. The CBI has its head office in Baghdad, and four branches in Basrah, Mosul, Sulaimaniyah and Erbil. At the present time the Iraqi banking system consists of 54 banks , including 7 – governmental organization, and one newly established Islamic bank , and 23 special commercial banks , 9 Islamic banks and 15 branches of foreign banks. As well as a representative office of one foreign bank .

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com