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Iraq
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Iraq with efficiency and assurance.
WHY IRAQ?
The Republic of Iraq (“Iraq”) is the fourth most populous country in the Middle East and has the world’s fifth largest proven oil reserves. Iraq, widely known with its rich heritage as the “Cradle of Civilisation”, is predominantly a desert, made fertile by the Euphrates and Tigris rivers. The official languages of Iraq are Arabic and Kurdish. The country covers an area of 438,317 square kilometres (169,235 sq. mi.) and has a population of over 46 million. Iraq’s economy is dominated by the oil and gas sector, where oil accounted for 43% of the GDP, 92% of the government budget revenues, and 96% of the country’s exports in 2019.
Iraq holds the world’s fifth largest proven crude oil reserves at 145bn barrels, representing 17% of proven reserves in the Middle East and 8% of the global reserves. At the end of 2020, Iraq’s proven natural gas reserves were the 12th largest in the world, at approximately ~132tn cubic feet. 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. With Baghdad as its capital, Iraq is divided into 18 governorates. The official languages of Iraq are Arabic and Kurdish, and the currency is the Iraqi dinar (IQD). Potential foreign investors now view Iraq with much more interest. As Iraq’s economy is dominated by the oil sector, which provides over 90% of government revenue and 80% of foreign exchange earnings, Iraq’s recent contracts with major oil companies have the potential to greatly expand oil revenues. PwC has been very active in Iraq since 2006 and has two offices in Erbil, one in Baghdad, and one in Basra. PwC Iraq provides advisory, audit, and tax services for key government entities, as well as banks, financial institutions, oil and gas companies, industrial companies, and agricultural companies within the Iraqi private sector.
ADVANTAGES
- Tax Holidays:
- Customs Exemptions:
- Profit Repatriation:
- Land Use:
- Vast Natural Resources:
- Massive Reconstruction Needs:
- Growing Domestic Market:
- Strategic Location:
- Competitive Tax Rates:
- No VAT:
- Competitive Labor Costs:
- Streamlined Registration:
- International Legal Protections:
TAX REGIME
Corporate Income Tax (CIT)
- Standard Rate:
A flat rate of 15% applies to most companies, branches, and permanent establishments.
- Oil and Gas Sector:
A higher rate of 35% is levied on companies and subcontractors in the oil and gas industry.
- Taxable Income:
Based on net profits after allowable business deductions. However, the GCT may apply a “deemed profit” approach if it determines that reported profits are lower than industry indicators.
- Filing:
Annual tax returns must be filed by May 31st following the end of the calendar year.
Personal Income Tax (PIT)
Iraq uses a progressive tax schedule for resident and non-resident individuals:
- 0 – 250,000 IQD: 3%
- 250,001 – 500,000 IQD: 5%
- 500,001 – 1,000,000 IQD: 10%
- Above 1,000,000 IQD: 15%
- Withholding: Employers are required to withhold income tax from salaries monthly (PAYE).
Indirect and Other Taxes
- Value Added Tax (VAT):
Iraq does not currently have a VAT or general sales tax.
- Sales Tax:
Specific levies apply to certain goods, such as 300% on alcohol/tobacco, 20% on mobile recharge cards, and 10% on first-class restaurants/hotels.
- Social Security:
Employers contribute 12% (25% in the oil sector) and employees contribute 5% of salaries to social security.
- Withholding Tax (WHT):
A 15% WHT generally applies to interest and certain payments made to non-residents. Dividends are typically exempt from WHT.
- Real Estate Tax:
A 10.8% tax is assessed on the annual revenue of real estate.
IRAQ COMPANIES
- Limited Liability Company (LLC) (Shirkah Dhati Mas’ooliyah Mahdoodah):
- Joint-Stock Company (JSC) (Shirkah Musahama Aama):
- Simple Company/Partnership:
- Sole Proprietorship (Individual Venture):
- Branch Office of a Foreign Company:
- Representative Office:
- Joint Venture (JV):
- Holding Company:
RELATED BLOGS
Contact Us
Get in touch with the right people to get the right help in setting up your business in Iraq.
enquiries@chandrawatpartners.com.