Iraq

A corporation has to determine its profit/loss according to its income statement for a tax period as established under the Unified Accounting System (Iraqi Generally Accepted Accounting Principles [GAAP]). However, to reach the taxable income, positive or negative adjustments have to be made to the profit/loss as determined according to GAAP.

Inventory valuation

There is no tax provision in the Iraqi tax law addressing inventory valuation.

Capital gains

Capital gains on sales of depreciable assets are taxed at the normal CIT rate. To the best of our knowledge and legal practice, gains derived from the sale of shares and bonds not in the course of a trading activity may be exempted from tax. Capital gains derived from the sale of shares and bonds in the course of a trading activity are taxable at the normal CIT rate.

Dividend income

Under the tax law, dividends paid out of profits that have been subject to tax are not taxed again in the hands of the shareholder.

Interest income

Interest income deemed to arise in Iraq is taxed at the normal CIT rate.

Rent/royalty income

Rent and royalty income deemed to arise in Iraq are taxed at the normal CIT rate.

Foreign income

There is no tax provision in the Iraqi tax law addressing foreign income. However, as per the Iraqi tax law, tax shall be imposed on the income of an Iraqi resident that arises inside or outside Iraq (i.e. worldwide), regardless of place of receipt.