IRAQ Law and Practice Contributed by: Ahmed Al-Janabi, MENA Associates in association with AMERELLER
A licensed investment project is also exempted from: • import duties on any item imported for the purposes of the investment project for three years from the date the investment licence is granted; • import duties on any item imported for the purposes of expanding, developing or mod - ernising the investment project for three years from the date the Investment Authority is noti - fied of the intended expansion; and • import duties on all spare parts imported for the purposes of the project, if the value of these parts does not exceed 20% of the fixed asset value. 5.4 Tax Consolidation To date, tax consolidation is not regulated under Iraqi law. 5.5 Thin Capitalisation Rules and Other Limitations There are no particular thin capitalisation rules applicable in Iraqi legislation. 5.6 Transfer Pricing Transfer pricing rules are not defined in the Iraqi legal system and there is no specific regulation. 5.7 Anti-Evasion Rules No specific anti-evasion law or regulation has yet been enacted in Iraq. As a general rule, companies must report finan - cial statements and pay taxes in the time and manner specified. Companies may be subject to inspection by the Companies Registrar if there has been a violation related to their filings. Questionable findings shall be reported to the relevant authorities for the appropriate action to be taken. In the meantime, the company’s file
will be suspended, along with the possible impo - sition of fines. The Registrar is entitled to see the company’s records by law; if it is prevented from seeing such documents, the company would be subject to heavy fines and possible imprison - ment for the person responsible. 5.8 Tariffs Tariffs and customs in Iraq are governed by Law No 22 of 2010. Tariffs have undergone many changes throughout the last ten years in Iraq. However, for the last two years, based on the recommendation of the Council of Ministers, customs started applying unified tariffs instead of a categorised system. The majority of goods are subject to 10% tar - iffs, including foodstuffs and essential daily use and home goods. The tariffs go up to 15% for some other goods, including transport vehi - cles, medical equipment, toys, clothes, leather, wood and cement products. The highest tariffs apply to alcohol, tobacco products, electric and electronic devices, antiques and weapons and ammunition. On the other hand, precious metals, gemstones and pearls have the lowest tariffs, at 0.5%. The tariffs regime in Iraq is almost independent and is not usually affected by global develop - ments. The main reason for the reforms on tariffs is to support the local economy and to avoid illegal imports, and to control the market intake of goods and in some cases reduce the import of certain targeted goods, like cigarettes, alco - hol and passenger cars. Eventually, the main goal for such tariffs is usually to increase the public income as customs tariffs are considered an important source for the public budget. Of course, using the unified rate tariffs helped in speeding up Iraq’s World Trade Organization accession process.
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