Iraq

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%.

WHT in Kurdistan region

The 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 of Finance. Please refer to the below table, which includes the deemed profit rates.

WHT rate on executed contracts is 15% from the deemed profit rate specified below:

* 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.