Iraqi government considers sales tax to relieve budget crisis
Iraq is mulling the possibility of imposing a sales tax amid concerns over the consequences of such a move on Iraqis already struggling in a down economy.
The Iraqi parliament’s Finance Committee on Nov. 28 called on the government to impose a 12% value-added tax beginning in 2021.
The call has raised popular anger and criticism as it comes during a devastating financial crisis — which is a result of the COVID-19 pandemic — and low oil prices, and amid concerns that the taxes collected are used to finance the parties and militias controlling the country.
Iraq already collects four types of taxes — sales, income, transfer of property and corporate — with rates ranging from 10-35%, but most of them are inactive. Some taxes are only imposed on large companies such as telecom companies, banks and foreign oil companies. Taxes constitute 2% of the gross domestic product.
Director-general of the General Tax Authority Shaker al-Zubaidi told Al-Monitor that bureaucracy and corruption have led to a decrease in tax revenues in the past years, since some companies that have been working in Iraq since 1999 have never paid taxes. He explained that the taxes are collected from companies following an audit of its budget by a foreign audit firm and Iraq’s General Tax Authority.
