Iraq

Corporate - Withholding taxes

Last reviewed - 08 December 2021

Under the tax law, the amount due from any residing taxpayers to a non-resident, whether the payment is made in cash or credited to the account, is subject to withholding tax (WHT) at the rate of 15% if such amounts are related to interest on debentures, mortgages, loans, deposits and advances, as well as annual allowances, pension salaries, or other yearly payments.

The WHT rate in cases where a resident is making a payment for interest to resident is 1.8% to 10%.

Dividends are not subject to WHT since dividends paid out of profits that have been subject to tax are not taxed again in the hands of the shareholder.

Additionally, industries/activities (non-upstream) contracted with oil and gas companies are subject to WHT on all payments at a rate of 3.3% or 7%.

Ministry of Finance in Kurdistan has issued instruction number (7) regarding WHT implementation in Kurdistan region on 11 April 2022 as follows:

  • The non resident entity in Iraq will be subject to WHT at a rate of 15% from the deemed profit determined by the Ministry if Finance. Please refer to the below tables which includes te deemed profit rates.

Table (A): WHT rate on the executed  contracts is 15% from the deemed profit rate specified below:

#

Type of activity 

Profit rate

1.

Machinery and equipment rental contract

35%

2.

Goodwill, Trademark, Patents, Copyright, Logo contract*

75%

3.

Research and consultancy contract

50%

4.

Marketing contract

40%

5.

Advertisement contract

30%

6.

Contracting and services contract

20%

7.

The contract of installation, establishment, operating, maintenance, and any contract that includes more than one activity

25%

8.

The contract of Athletes and Artists

30%

9.

Any contract that is not included in the above paragraphs, the Directorate of Taxes and State Real Estate is responsible for determining its profit rate**

*The Goodwill, Trademark, Patents, Copyright, Logo contract will be subject to the follow:

Table (B):

1.

FY 2009 till FY 2015

20%

2.

FY 2016 till FY 2017

60%

3.

FY 2018,2019,2020

65%

4.

FY 2021 based on the instruction No (7) 2022

**It shall be noted that any other activities that have not been mentioned in the above table will be subject to the tax authority decision if it will be subject to WHT.