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Iraq Government issues 2018 Federal Budget

On 3 March 2018, the Iraqi Parliament passed its 2018 Budget Act (the Budget). The Budget includes several measures to support economic growth and fiscal stability as Iraq recovers after the 2017 military defeat of the Islamic State of Iraq and Syria (ISIS) and the drop in global oil prices.

One significant measure is the proposal of a 5% sales tax to apply to the sale of all consumer goods, except items sold as part of Iraq’s ration card system and services provided by beauty salons for men and women. However, it is not yet clear if the Iraqi Government will in fact implement the proposed sales tax on consumer goods or if it will release regulations on its application. Furthermore, the Budget does not provide a date from which the proposed sales tax regime will apply.

The Budget also confirms the continued application of the following taxes and levies:

  • Sales tax on mobile and internet recharge cards at a rate of 20%
  • Sales tax on restaurants and hotels in accordance with the provisions of the Revolutionary Command Council Resolution No. 36 of 1997
  • Airport tax equal to 25,000 Iraqi dinars (US$21) levied on airline tickets for international flights and 10,000 Iraqi dinars (US$8) levied on airline tickets for domestic flights
  • A penalty of 200% for the importation of alcoholic beverages levied at the entry ports

Other measures to support economic growth include the proposal of a new excise tax of 25% applicable to imported sweets, ice cream, dairy, juices, and carbonated drinks, to be levied at the entry ports.

The full Budget is available in Arabic on the Iraqi Parliament’s website.

Future Alerts will provide updates as additional information becomes available.

EYG no. 01296-181Gbl

Download this Tax Alert as a PDF file

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