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Income tax law implementation for private sector starts next week

By Rudaw 18/4/2017
The income tax form to be filled out by individual employees, then presented to the tax department in their province.
The income tax form to be filled out by individual employees, then presented to the tax department in their province.
ERBIL, Kurdistan Region — The 5-percent income tax on private sector employees will take effect next week, after which employees have 21 days to file their financial report to the authorities, or face fines, the Ministry of Finance and Economy of the Kurdistan Regional Government (KRG) told Rudaw on Monday.

Kamal Tayeb, head of the ministry’s tax department, told Rudaw on Tuesday that the income tax on private sector includes both local and foreign workers, including those who work for non-governmental organizations (NGOs).

The ministry earlier in the month had announced a deadline of April 21 for the region’s private sector to comply with the ministry’s decree of 2011 which subjects the private sector’s companies and employees to pay a tax of five percent in their income to the government, or face necessary fines. 

A 5-percent income tax will be imposed on public and private sector employees whose monthly salaries exceed 1 million Iraqi dinars (IQD), or about 856 USD, reads the KRG’s income tax law passed by the parliament in 2011.

The taxes would only be deducted from any extra amount after the first 1 million IQD. For example, if a person is paid 1.5 million Iraqi dinars, they will pay taxes only for the 500,000 IQD, which equates to 25,000 IQD.

The KRG has given the private sector a 12-day notice to abide by its income tax law which was amended nearly five and half years ago, but remains unimplemented to date. 

The Ministry of Finance and Economy has issued a statement on the outstanding status of the law and sent a copy to Rudaw, warning the private sector of fines if it fails to comply with the law.

“All payment reports must be submitted to the directorate of income tax before the deadline of April 21 expires or necessary fines will be levied,” a statement from the ministry read earlier in April. 

The KRG approved a set of instructions this year to directly cut the income of those violating its income tax law. According to these instructions, Employees who fail to submit their income tax report on time will “be fined by 75,000 IQD.” They will also be “subjected to a fine of 5 percent in the overall tax they fail to pay, that is if they are late in paying their taxes.” 

The instructions state that the income tax law will not apply on “pensioners, expenses dedicated to treat patients, an accident happening while at work, death compensations, salaries and endowments of diplomats.” 

“The system was already there. And it will now be applied to all companies in a practical way. Government employees have already been paying their taxes annually,” Tayeb told Rudaw in early April.  


Susan Joseph | 18/4/2017
where can i find this form

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