Iraq Tax Overview – Corporate, Personal & Withholding Tax

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 Iraq’s tax system is governed primarily by the General Commission for Taxes (GCT) and is built around corporate income tax, personal income tax, withholding tax, and a range of indirect taxes and fees. For companies operating in Iraq – whether local entities or foreign investors – understanding the Iraq tax framework is essential for compliance, risk management, and cost planning.

ASHUR International supports clients in navigating Iraq’s tax rules with practical, on-the-ground experience from our office in Baghdad.

 The standard corporate income tax (CIT) rate in Iraq is 15% on taxable profits. This rate generally applies to most sectors, including trading, services, and industrial activities.

However, companies operating in the oil and gas sector or working under certain oil and gas contracts may be subject to a higher effective tax rate of 35%, depending on the nature of the contract and the applicable legislation.

Key points on CIT:

• Taxable base: Net profit after allowable expenses
• Standard CIT rate: 15%
• Oil & gas contracts: Often 35% effective rate
• CIT return filing deadline: 31 May following the end of the tax year
• Final tax payment: Usually due within a short period of receiving the assessment from the GCT
   

Proper bookkeeping, supporting documentation, and correct classification of expenses are critical to defending tax positions in case of audit.

 Individuals in Iraq are generally subject to personal income tax (PIT) at progressive rates up to 15%, depending on income level and applicable brackets. Salaries, wages, and certain benefits may be subject to PIT.

For employers, this means:

• Calculating PIT on employees’ salaries 
• Withholding the tax at source
• Remitting the tax to the authorities within the prescribed deadlines
   

Key PIT dates and obligations:

• PIT return due date: 31 March
• PAYE (Pay-As-You-Earn) remittance: Typically within 15 days after the end of the month in which salaries were paid
   

Foreign employees working in Iraq may also be subject to Iraqi PIT depending on their residency status, the length of stay, and the nature of their work. Coordinating Iraq PIT with home-country tax rules is often essential for expats and their employers.

 Withholding tax plays an important role in the Iraq tax system, particularly for service contracts and payments to non-resident entities.

While rates and practices can vary depending on contract type and sector, typical concepts include:

• WHT on certain service fees paid to non-residents
• WHT on interest and royalties
• Sector-specific withholding arrangements in oil & gas and construction projects
   

In some cases, WHT is applied as an advance payment of income tax; in others, it may be treated as a final tax. Correctly drafting contracts and understanding the applicable WHT treatment is essential to avoid disputes and unexpected costs.

 Iraq does not currently operate a broad-based VAT system like some other countries in the region. However, certain goods and services may be subject to sales tax or other indirect charges, and the landscape continues to evolve.

Companies should monitor developments in:

• Indirect tax and sales tax rules 
• Customs duties and import charges
• Sector-specific fees and levies
   

As Iraq continues to modernize its fiscal framework, indirect tax reforms may play a larger role in future years.

 In Iraq, capital gains are generally taxed at the same rate as ordinary income:

• For companies: Capital gains are usually taxed at the normal CIT rate
• For individuals: Capital gains are generally taxed at the normal PIT rate
   

There is currently no net wealth tax, and gift/inheritance taxes may apply in certain cases at specific thresholds and rates, depending on applicable legislation.

 Tax compliance in Iraq requires careful attention to:

• Registration with the GCT and other relevant authorities
• Timely filing of tax returns for CIT and PIT
• Maintenance of proper accounting records and supporting documents
• Understanding the treatment of cross-border transactions
• Managing interactions and queries from the tax authorities
   

Companies that fail to comply may face assessments, penalties, and delays in obtaining tax clearance certificates.

ASHUR International provides a full range of Iraq tax services for local and international businesses, including:

• Corporate tax planning and advisory
• Preparation and filing of CIT and PIT returns 
• Assistance with withholding tax analysis and contract structuring
• Support with tax audits, assessments, and negotiations with the GCT
• Guidance for expatriate employees and employer obligations
• Social security and payroll tax alignment with Iraq legislation
   

With a solid presence in Baghdad and deep knowledge of the Iraq tax environment, ASHUR helps clients reduce risk, comply with regulations, and optimize their tax position in a complex and evolving market.

 For tailored advice on Iraq tax matters, please contact our team at ASHUR International. We work with companies, investors, and financial institutions to provide practical, reliable tax and advisory solutions across Iraq.