A sales tax of 300% is imposed on alcohol and tobacco (cigarettes), 15% on travel tickets, 15% on cars, and 20% on mobile recharge cards and internet. This is in addition to services rendered by deluxe and first class restaurants and hotels, which are subject to a 10% sales tax.
The customs duty rates are specified in the customs tariff and the agriculture agenda that are annexed to the Customs Duty Law.
There is no tax provision in the Iraqi tax law addressing excise taxes.
A basic tax of 10% 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). In cases where the owner or long-term lessee cannot be located, the person occupying the real estate will be assessed. Note that the annual revenue for each real estate is discounted by 10% for expenses and maintenance before assessing the tax on that real estate.
There are no restrictions or taxes on transferring funds into or out of Iraq.
Contracts are subject to stamp fees at rates that range between 0.1% and 3% of the contract value.
The payroll tax system in Iraq is similar to a pay-as-you-earn (PAYE) system, whereby the employer is obligated to withhold tax from salaries and wages paid to its employees and remit same to the tax authorities. Failure to do so will result in the employer being subject to penalties and late payment interest.
Social security contributions
With respect to contribution to the social security fund in Iraq, employers are divided into a number of categories, which is the driver for determining the contribution percentage. Employers that are categorised as prime contribute at the upper rate (25% from the employer and 5% from the employee), whereas other categories contribute at the lower rate (12% from the employer and 5% from the employee).
Determining to which category the employer relates is subject to the social security department discretion. The criteria for this determination is not crystallised in the law; however, in practice, the social security authorities make their determination based on the business sector the employer is involved in (e.g. those in the oil and gas related industries are expected to attract the upper rate).