Income tax reports in Iraq: what employees must do and when

How is tax collected from an employee's salary?

Article 17 of Income Tax Law No. 113 of 1982 requires employers to deduct the tax due from what they pay their staff, including salaries, cash and in-kind payments and pensions, and to hand it over to the General Commission for Taxes. The employer must hand it over even if it did not deduct it from the salary, and owes extra charges if it pays late.

The law lets the employer raise or lower the instalments it deducts during the year to correct any over- or under-deduction. The commission's notes on the direct withholding instructions say that if too much or too little was deducted, the difference can be settled before the end of the financial year in which it was deducted.

In practice, an employee whose only income is a salary has their tax handled entirely through their employer. But the same Article 17 says this does not stop the commission from asking any employee for an income report, so if you receive a notice you must respond.

When must you file an income tax report?

Article 27 of the law says that anyone, registered or not, who has taxable income must file a report on that income before 1 June of the assessment year, if they have not been asked to by written notice or public announcement. If the commission asks by notice, you have 21 days from being notified.

There is a specific rule for employees: an employee files, through their employer, a report on any income other than salaries and allowances. The employer certifies the signature and passes the report to the commission. Examples are rent from a let property or profit from a side business.

In Iraq the assessment year follows the year the income arises for most types of income, including salaries, under Article 3. So income earned in 2026 is assessed in 2027, and the last day to report it is 31 May 2027.

The income tax guide on the commission's website says anyone with income during the year is expected to file an income tax report without waiting for the tax authority to ask, and also to tell it when they start any activity.

How do you file the report?

The General Commission for Taxes publishes the "Income Tax Report" form on its website, tax.mof.gov.iq, among its tax forms. It is a paper form stamped as received at the commission's branch, and it asks for:

• Your full four-part name and family name, mother's name, nationality, and unified ID card or civil status details.
• Home address, workplace, occupation and phone number.
• Marital status, and your spouse's name, occupation and file number if they have one.
• The children covered by the allowance and their dates of birth.
• Your estimate of your net income from all sources.

We did not find an online service on the commission's website for individuals to file the report, so treat the commission branch for your area as the place to file, and ask it about any new online channel.

Once the filing period ends, the commission reviews the reports. Under Article 30 it either accepts a report and assesses the tax on it, or rejects it and assesses the income from whatever information it has. If you do not file a report, it can assess your income itself, and that does not remove your liability for the delay.

What are the fines and extra charges?

• Not filing the report by 31 May: the commission adds an extra 10% of the tax due, capped at 500,000 dinars, unless the taxpayer shows the delay had a legitimate reason, under Article 56.
• Paying late: if the tax is not paid within 21 days of notification, 5% of it is added, and this amount doubles if it is still unpaid after another 21 days, under Article 45. The minister, or someone the minister authorises, may waive all or part of it if the delay was due to absence from Iraq, illness or circumstances beyond your control.
• Hiding taxable income: the commission's guide says the penalty is at least twice the tax, on top of paying the tax itself.

If you disagree with the commission's assessment, you can object in writing within 21 days of notification, then appeal within 21 days of your objection being rejected.

Allowances and joining spouses' income

Article 12 gives residents allowances that are deducted from income before tax is worked out: 2,500,000 dinars for the taxpayer, 2,000,000 dinars for a wife who is a homemaker with no income or whose income is joined with her husband's, 200,000 dinars for each child however many there are, 3,200,000 dinars for a widow or divorced woman, and an extra 300,000 dinars for anyone over 63.

These allowances are not given automatically. The commission's notes on the direct withholding instructions point out cases worth watching:

• A married female employee gets only the single person's allowance, even if she receives spouse and child allowances in her pay, unless her income is joined with her husband's.
• A female employee whose husband is unemployed or unable to work gets the allowance for herself, her husband and her children, provided a request to join incomes, signed by both spouses, is submitted to the wife's employer in January only, with a letter from the commission branch.
• A divorced male employee gets an allowance for his children only with a court guardianship document.

The law also lets spouses ask to join their incomes during the filing period in the cases set out in Article 6.

Worked example: an employee whose husband has no income

A private sector employee earns 1,500,000 dinars a month, so 18,000,000 dinars a year, and her husband is unemployed. The figures come from the Iraq calculator and apply federal Iraq's rules.

Without a request to join incomes: she is treated as single. After the 5% social security contribution (900,000 dinars) and the 2,500,000 dinar allowance, 14,600,000 dinars is taxable, and the tax is 2,110,000 dinars a year.

With a joining request in January: her allowance becomes 4,500,000 dinars, so taxable income falls to 12,600,000 dinars and the tax to 1,810,000 dinars. That saves 300,000 dinars a year, because the extra 2 million dinars would have been taxed at 15%. Each child adds a 200,000 dinar allowance, saving about another 30,000 dinars per child at the same rate.

Note that the calculator uses the brackets in the law published on the commission's website, as summarised in the Iraq tax guide, and assumes the social security contribution is deducted from income. This is an illustration, and your payslip is the real reference.

Is over-paid tax refunded?

Yes. Article 49 requires the commission to refund any tax a taxpayer paid above what they owed, provided a request is made within 5 years of the end of the financial year in which the excess was paid. For tax collected through direct withholding, the law says it is refunded without the taxpayer needing to ask.

In practice, the quickest route for an employee is to settle it within the same year through the employer, as the commission's notes suggest. So hand in your marriage and children documents early, and check your payslip in the first months of the year.

What if I am Iraqi and work abroad?

An Iraqi counts as resident if they lived in Iraq for at least 4 months in the year the income arose, or if their absence was temporary and they have a permanent home and main place of work in Iraq. Article 5 says an Iraqi resident is taxed on income earned in Iraq or abroad, and may deduct tax paid to a foreign country on that income, up to the matching Iraqi tax.

So if you genuinely live in the Gulf or Europe all year and your absence is not temporary, as a rule your salary there is outside Iraqi tax. But any income arising in Iraq, such as rent from property, is still taxable and needs a report. To avoid paying twice, read the double taxation guide and tax residency and the 183-day rule.

To compare before a move: Iraq or the UAE, Iraq or Saudi Arabia and Jordan or Iraq. For the brackets and social security in detail: the Iraq tax guide.

The Kurdistan Region runs its taxes through its own institutions. This guide covers federal Iraq's rules only, and is no substitute for checking with the commission branch on your own case.

Sources

1. General Commission for Taxes: Income Tax Law No. 113 of 1982, as amended (Articles 1, 3, 5, 6, 12, 17, 27, 30, 45, 49 and 56)
2. General Commission for Taxes: Income tax guide (report before 31 May, penalties and objections)
3. General Commission for Taxes: Income tax report form
4. General Commission for Taxes: Notes on applying Direct Withholding Instructions No. 1 of 2007 (allowances, joining incomes and settlement)

This guide is general information, not tax advice. Rules change; check with the authority or a qualified adviser before you act. How we work.