Kurdistan Region to enforce income tax law on private sector

ERBIL, Kurdistan Region – Ministry of Finance and Economy of the Kurdistan Regional Government (KRG) has given a deadline of April 21 to 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 five percent income tax will be imposed on public and private sector employees whose salaries exceed one million Iraqi Dinars (IQD), the KRG’s income tax law passed by the parliament in 2011, reads. 

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 of it to Rudaw, warning the private sector of fines if failed 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.” 

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,” Dr Kamal Tayeb, director general of the tax office at the ministry of finance, told Rudaw.