In this page:
Accounting Rules |
Tax Rates |
Intellectual Property |
Legal Framework |
- Tax Year
The fiscal year begins on January 1st and ends on December 31 of the same year.
- Accounting Standards
The Iraqi Company Law No. 21 of 1997 establishes financial reporting requirements in Iraq. According to the Law, all companies must apply IFRS or IFRS for Small and Medium-sized Enterprises. Full IFRS are required to be used by companies whose securities are publicly traded, private banks, private shared companies; and consultancy companies.
The Iraq Interim Law on Securities Markets (adopted 18 April 2004) requires IFRSs for all companies listed on the Iraq Stock Exchange.
- Accounting Regulation Bodies
Iraqi General Commission for Taxes
- Accounting Reports
Balance sheet and profit and loss account.
- Publication Requirements
Registered entities must prepare annual financial statements, with IQD as the accounting currency, in accordance with the Iraqi Uniform Accounting System, and in Arabic.
- Professional Accountancy Bodies
Iraqi Union of Accountants and Auditors
- Certification and Auditing
You can contact an external auditor, like Deloitte, KPMG and PwC.
- Accounting News
- Nature of the Tax
- Tax Rate
No value-added tax applies in Iraq (refer to the sales tax above).
- Reduced Tax Rate
- Other Consumption Taxes
A sales tax of 300% is applied on alcohol and tobacco, 20% on mobile recharge cards and internet, and 15% on travel tickets and on cars. Deluxe and first-class restaurants and hotels are subject to a 10% sales tax.
- Company Tax
- Tax Rate For Foreign Companies
Foreign companies are taxed at the same rate as national ones. The income realised in Iraq from contracts concluded with foreign oil companies, their branches or offices, and subcontractors working in Iraq in the oil and gas production sector and related industries is subject to a withholding tax (usually at 3.3% or 7% for oil and gas).
- Capital Gains Taxation
Gains derived from the sale of assets are included in ordinary income and taxed at the normal corporate tax rate. Gains derived from the sale of shares and bonds not in the course of a trading activity may be exempted from tax.
- Main Allowable Deductions and Tax Credits
Under the tax law, legally documented expenses of a taxpayer incurred in producing income in Iraq, are generally deducted from profits arising from other sources, provided they are duly documented.
Depreciation of fixed assets is tax-deductible (with maximum rates set by the Iraqi Depreciation Committee). The Iraqi tax legislation does not include a provision regarding the deductibility of goodwill or interest expenses. Start-up expenses are not covered by the Iraqi legislation either; however, they are usually capitalised and amortised as per Iraqi Generally Accepted Accounting Principles.
Bad debts are generally deductible, same as for charitable contributions to recognised institutions.
Fines and taxes are not deductible.
Losses can be carried forward up to five years, but are limited to half of the taxable income of each of the five years. Moreover, losses carried forward may be offset only against the same source of income from which the original loss arose. Carryback of losses is not allowed.
- Other Corporate Taxes
A basic tax of 10.8% (12%, discounted by 10% to allow a notional deduction for assumed maintenance and depreciation) is assessed on the annual revenue for all real estate and is collected from the real estate owner or the long-term lessee (five years).
Stamp fees for contracts range between 0.1% and 3% of the contract value. Stamp duty stands at 0.2% on contracts of fixed value.
The employer is required to withhold tax from salaries and wages paid to its employees and remit it to the tax authorities.
Regarding social security contributions, employers are divided into a number of categories with different contribution percentage. Employers categorised as prime contribute 25% of an employee's salary for social security, whereas other categories contribute at the lower rate of 12%. The employer deducts 5% from an employee’s salary and also makes a 12% or 25% employer contribution.
The social security contributions in the Kurdistan Region are 5% for employees and 12% for employers.
- Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
Country Comparison For Corporate Taxation
||Middle East & North Africa
|Number of Payments of Taxes per Year
|Time Taken For Administrative Formalities (Hours)
|Total Share of Taxes (% of Profit)
- Latest available data.
|Personal income tax
||Progressive rates from 3% to 15%
|IQD 0 - 250,000
|IQD 250,001 - 500,000
|IQD 500,000 - 1,000,000
|Above IQD 1,000,000
||5% for employment income
||Taxed accordingly to the individual tax brackets/rates
- Allowable Deductions and Tax Credits
Deductible annual allowances for salaries received include an amount equal to 100% of salaries received from the government, public institutions, and local authorities; and contributions to a social security system.
An exemption from tax in relation to "risk allowances" is allowed, up to 30% of the basic salary.
Individuals working in the private sector are eligible for personal allowances (adequate supporting documents must be provided): IQD 2.5 million for a single person, IQD 4.5 million for a married person, IQD 300,000 for age allowance (over 65), IQD 200,000 for child allowance.
In the Kurdistan Region, individuals are entitled to a tax-free legal allowance of IQD 1 million per month.
- Special Expatriate Tax Regime
Iraqi residents are taxable on their worldwide income, whereas non-Iraqi nationals are subject to tax on income arising in Iraq, irrespective of their residence status.
Income derived abroad through funds and deposits held in Iraq is also taxable.
Double Taxation Treaties
- Countries With Whom a Double Taxation Treaty Have Been Signed
There is a treaty of the Arab Economic Union Council, of which Iraq is a signatory; however, it does not seem to be widely applied in practice. Hungary is the only EU country with whom Iraq has signed a tax treaty.
- Withholding Taxes
Dividends - Iraq does not levy withholding tax on dividends.
Interest - 15% when paid to a non-resident company, 0 otherwise
Royalties - A retention tax applies to payments to subcontractors (between 3% and 7%, according to the industry)
- Independence of Justice
The independence of the judiciary is guaranteed by Article 87 of the 2005 Constitution. Nevertheless, according to Human Rights Watch, the abuses in the criminal justice system are a major concern in Iraq, and the criminal justice system is plagued with arbitrariness and opacity.
- Equal Treatment of Nationals and Foreigners
Foreign nationals participating in Iraqi criminal proceedings have all the rights that are provided to Iraqi nationals. They are additionally granted some specific rights as well given also the possibility to request their countries for judicial cooperation in respect of the alleged or proven crimes committed by them. In practice, this equality may not be applied.
- The Language of Justice
The official languages of Iraq are Arabic and Kurdish.
- Recourse to an Interpreter
Foreigners can ask for an interpreter.
- Sources of the Law and Legal Similarities
The Council of Representatives and the Federation Council have the legislative power in Iraq.
- Checking National Laws Online
Iraqi law database
- General Information
- Opening Hours and Days
Government offices are open from Saturday to Thursday from 8am to 2pm
Banks are open from Saturday to Thursday from 8am to 12.30pm (to 12pm on Saturday)
Shops & Malls are open from 9am to 6pm
Private Sector offices are open from 8am to 5pm, with a lunch break of one or two hours
During the month of Ramadan working hours are usually reduced.
||Exact dates of Islamic Calendar are subject to moon sightings, thus public holidays may occur in different dates of the Gregorian Calendar each year.
|New Year's Day
Jan 6 2018
||Mar 21 2018
||May 1 2018
||Jun 15 2018
|Eid al-Fitr holiday
||Jun 16 2018
|Eid al-Fitr holiday
||Jun 17 2018
||Jul 14 2018
||Aug 22 2018
|Eid al-Adha holiday
||Aug 23 2018
Periods When Companies Usually Close
||According to the Islamic Calendar
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Latest Update: September 2023