Federal Iraq announced a new waiver for late filing penalties

What does this mean for businesses?

On 19 August 2019, the Parliament of Federal Iraq has announced Law No. 9 of 2019 on its Official Gazette. The waiver relates to penalties applied to the late filing of tax returns included in Articles 56, 57, 58, and 59 of the Federal Income Tax Law no. 113. The details of the penalties that can be waived are listed in the table below.

The waiver will be available by application to the General Commission for Taxes (GCT) and will be valid for a year from the date the new law was published (i.e. up to 18 August 2020). Taxpayers in Federal Iraq can benefit from the waiver provided that the taxes relevant to the late filing have been paid.

In addition, the law suggests that if the waiver has been applied but the tax liability remains outstanding after one year, an additional interest of 10% will be applied by the GCT.

For your ease of reference, the official Arabic version of Law No. 9 of 2019 and Deloitte’s English translation of the Law can be downloaded now. Please kindly note that the English text is not an official translation and is provided for information purposes only.


Penalties that can be waived

The waiver applies to the following penalties:


Corporate income tax

Employment tax

Penalty on late filing

  • IQD 500,000 LLCs
  • IQD 10,000 Branches
  • 10% of tax due (up to IQD 500,000)

Court rulings

  • Additional penalty of twice the tax liability and/or imprisonment for tax assessments subject to court ruling

The GCT has verbally confirmed that the waiver will not cover penalties and interest applied to late tax payment. This indicates that there will be limited tax savings available to entities who have outstanding filings, as it is expected that interest and late payments penalties will still apply.

Previously, the GCT had issued similar waivers. In April 2017, a waiver was granted for outstanding interest and penalties on taxes. In October 2017, the waiver was granted for interest on late tax payments only.

It is unclear how the GCT will apply the new waiver in practice. Our team is in continuous discussions with them to gain more clarity and will keep you updated on the matter.

Our service offerings in Iraq

In addition to the above, Deloitte has published a summary document around our tax service offerings in Iraq. The document provides clear insight on the added value we can bring to businesses through corporate income tax, withholding tax, employment tax, social security contributions and other tax services. To view the document, please refer to the following link.

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