globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

08 March 2018

Iraqi 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.

———————————————
CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Jordan), Amman

  • Ali Samara
    ali.samara@jo.ey.com
  • Jacob Rabie
    jacob.rabie@jo.ey.com

Ernst & Young Middle East (Iraq), Baghdad

  • Mustafa Abbas
    mustafa.abbas@iq.ey.com

Ernst & Young Middle East (Dubai)

  • Chris Lord
    chris.lord@ae.ey.com
  • Nizar El Salem
    nizar.elsalem@iq.ey.com

Ernst & Young LLP, Middle East Desk, Houston

  • Gareth Lewis
    gareth.lewis1@ey.com

———————————————
ATTACHMENT

PDF version of this Tax Alert

 

Document ID: 2018-5379

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2025, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more