Supreme Committee for Tax Reform: We will rely only on net profit in calculating income tax

The head of the Supreme Committee for Tax Reform, Abdul Hussein Al-Anbaky, confirmed that the income tax will be based on the net income of the taxpayer only, noting that an income of one million Iraqi dinars may not be subject to tax. Al 

-Anbaky said, in a statement reported by the "Rudaw" media network, and reviewed by "Al-Eqtisad News", that "the Income Tax Law, enacted under No. 13 of 1982, was based on the same principles and methods adopted in 1959, and therefore it is an old law that does not keep pace with economic developments in Iraq and the world." 

He explained that the law includes basic points, "the first of which is that the law in Iraq be consistent with international standards in the field of tax accounting, and this will be clear and transparent for international companies, as well as adopting the self-assessment method in this law, in addition to adopting international standards in the field of the tax base, and thus estimating the tax accordingly." 

Another essential aspect of this law, Al-Anbaky pointed out, is that it “will take into account tax justice, so that high taxes are imposed on those with high incomes, and low taxes on those with low incomes,” adding that “the ceiling of allowances will be greater than in the previous law, taking into account developments in inflation rates, people’s standard of living, and their basic needs,” according to him.

He explained that the law “will be friendly to the business environment, by relying on easy and simple methods to reach tax accounting, and greatly reducing red tape. It also includes a shift to new tax bases that were not previously targeted, such as including the tax on the environmental field, as the more environmentally and climate-friendly the projects are, the lower the tax will be, and vice versa.” 

The head of the Supreme Committee for Tax Reform continued that the new law “significantly addresses double taxation between countries, as well as tax evasion.”

He stressed the reliance on "net profit only in calculating income tax, excluding the costs borne by the producer, investor or professional," explaining that "the taxpayer in the public or private sector will be responsible for assessing his income tax, and he will be held accountable and granted a certificate of good conduct, followed by subsequent monitoring. If there are differences in the self-assessment of income tax and the findings of the audits, he will be held accountable again on the basis of the difference or the accounting will be carried over to the following year." 

Al-Anbaki noted that an income of one million dinars may not be subject to tax, noting that the tax rate increases from 0% to 20%. 

He stated that in the event of bankruptcy in production, the taxpayer will not be compensated but will be exempted from the tax.  

8 new tax packages 

The Iraqi government has begun increasing taxes in order to maximize non-oil revenues, while an advisor to Iraqi Prime Minister Mohammed Shia al-Sudani confirmed that the government "has begun adopting a new approach to tax reform." 
 
On September 7, Jamal Kocher, a member of the Finance Committee in the Iraqi Council of Representatives, said that the government has begun increasing taxes in an attempt to maximize non-oil revenues. 
 
Kocher pointed out that the tax collected by the Iraqi government is "acceptable and not very high." 
 
For his part, Mazhar Mohammed Saleh, financial advisor to Iraqi Prime Minister Mohammed Shia al-Sudani, said, “The first step taken by the government to maximize non-oil revenues began with adopting a new approach to tax reform.” 
 
He added that eight new tax reform packages have been approved by the Council of Ministers.
 
Al-Sudani's advisor stated that "two tax reform packages have been launched and the remaining packages will be launched sequentially and gradually within the government's reform policy in the financial field and maximizing the state's resources from sources of income and wealth outside the oil sector."