Ali Zuweid's Political Programme · Proposed legislation · Economy, Finance, Investment and Employment
Unified Tax System and Modern Tax Administration Law
A federal draft law establishing a unified code of tax procedures and redesigning administration around national registration, self-assessment, digital services, e-invoicing, risk management, controlled auditing, graduated collection, refunds and dispute resolution, with explicit protection of taxpayer rights.
Executive Summary
Iraq's tax framework suffers from clear legislative and procedural fragmentation. The General Commission for Taxes still administers laws whose origins in some cases date to the nineteen-fifties, sixties and eighties, while business, payments, data and the digital economy have changed substantially. Despite amendments, Income Tax Law No. 113 of 1982 reflects an administrative model heavily reliant on assessment, paper notifications, successive objections and collection rules no longer suited to large-scale digital tax administration.
The Iraqi Constitution establishes a fundamental rule: no tax may be imposed, amended, collected or exempted except by law. It also reserves fiscal and customs policymaking exclusively to the federal authorities. This draft therefore does not seek to authorise the administration to create new taxes, but clearly separates tax policy, which the legislature determines, from tax administration, which must become more efficient, transparent and auditable.
The draft retains the General Commission for Taxes and reorganises its functions rather than creating a new agency. Self-assessment becomes the norm, supported by a unified national taxpayer register, electronic tax accounts, digital filing and payment, phased e-invoicing, controlled data matching, risk-based auditing, time-bound refunds, administrative review independent of the audit body, followed by tax appeal and judicial challenge.
In collection, the draft moves from broad administrative restrictions to graduation and proportionality: no imprisonment merely for inability to pay a civil tax debt, no travel ban based solely on an administrative decision, and no tax clearance requirement for essential civil services. It nevertheless retains strong anti-fraud tools: digital tracking, invoicing, data matching, an anti-abuse rule, related-party pricing provisions, and specific criminalisation of fraudulent evasion.
The draft does not immediately change existing tax rates or bases, because redesigning income tax or introducing a general consumption tax requires separate fiscal and social modelling. Its primary function is to build the legal and administrative infrastructure that makes subsequent tax reform implementable and subject to oversight.
Constitutional and legal context
Article (28) of the Constitution provides that taxes and fees may be imposed, amended, collected or exempted only by law, and requires consideration of exemptions for low-income people to ensure the minimum necessary for living. Article (110/Third) reserves fiscal and customs policy, preparation of the general budget and monetary policy exclusively to the federal authorities. Together, these provisions impose a fundamental constraint on reform: substantive elements of tax liability must remain with the legislature, while administrative mechanisms and procedures may be modernised through a clear framework law.
According to its official publications, the General Commission for Taxes currently administers Income Tax Law No. (113) of 1982, as amended; Property Tax Law No. (162) of 1959; Vacant Land Tax Law No. (26) of 1962; and Law No. (19) of 2010 Imposing Income Tax on Foreign Oil Companies Contracted to Operate in Iraq, alongside regulations, instructions and specific sales taxes. The Ministry of Finance's internal regulations, amended in 2019, assign the Commission administration, imposition, assessment, collection and follow-up of direct tax and sales tax debts, with departments for large taxpayers, commercial businesses, companies, auditing, examination, withholding and other functions.
The problem is therefore not the absence of an existing tax administration, but the dispersal of procedural rules across multiple laws and the fact that much of the legal infrastructure predates the digital economy, electronic payments, automated verification and modern compliance risk management.
Legislative Gap
| Area | Issue Requiring Action | Response in the Bill |
|---|---|---|
| Procedures | Multiple registration, assessment, objection and collection rules across legislation. | A unified procedures code applying to taxes administered by the Commission. |
| Assessment | Substantial scope remains for administrative assessment and direct contact. | Self-assessment as the norm, administrative assessment as a reasoned exception. |
| Digitalisation | Old rules do not establish a complete digital tax cycle. | A unified platform, taxpayer account, digital filing, payment, invoicing and correspondence. |
| Audit | A need for more consistent and transparent targeting. | Compliance risk management and selection based on risk and analytics. |
| Objections | Under the existing law, acceptance of some objections depends on payment of assessed tax. | Remove the full-payment condition; require payment only of the undisputed portion. |
| Travel Bans | The existing Income Tax Law permits administrative requests for travel bans in certain circumstances. | Restrict the measure to a reasoned, temporary judicial decision where a real risk exists. |
| Refunds | A need for clearer service deadlines and risk management. | A standard timeframe, risk checks and compensation for delay after entitlement is established. |
| Confidentiality | Traditional secrecy without detailed digital access governance. | Need-based permissions, access logs and controlled data exchange. |
| International Compliance | A need for clearer rules on related parties and artificial structures. | Economic substance, anti-abuse rules and arm's-length pricing. |
Proposed legislative policy
The draft adopts a unified tax procedures and administration law rather than attempting to merge all Iraqi taxes into one or change their rates at once. This presents less fiscal and constitutional risk because it addresses the weakest shared link across taxes: administration, procedures, data, services and disputes. Redesign of each tax's base, rate and exemptions is left to separate substantive legislation informed by an impact assessment.
The draft avoids establishing a new independent authority; the General Commission for Taxes already exists in law with a branch network and organisational units. The more appropriate reform is functional reorganisation, greater independence of technical decisions in individual cases, and a system for data, digitalisation, internal oversight and independent administrative review.
The bill
In the name of the people
Presidency of the Republic
Pursuant to Article (61), paragraph (First), and Article (73), paragraph (Third), of the Constitution, and following enactment by the Council of Representatives, the following Law is issued:
Unified Tax System and Modern Tax Administration Law No. ( ) of ( )
Chapter One — General Provisions and Governing Principles
Article (1) — Title and Substantive Scope
This Law shall be called the “Unified Tax System and Modern Tax Administration Law”. It establishes common general rules for administering federal taxes that the General Commission for Taxes imposes, assesses, collects or follows up. Each tax's base, rate and exemptions shall remain governed by the law establishing it unless this Law expressly provides otherwise.
Article (2) — Objectives
This Law aims to unify tax procedures, strengthen fairness and legal certainty, broaden voluntary compliance, reduce direct taxpayer-official contact, adopt self-assessment and risk-based auditing, digitalise registration, filing, payment and refunds, protect taxpayer rights, and improve collection efficiency without imposing a new tax otherwise than by law.
Article (3) — Scope of Application
This Law shall apply to federal taxes within the General Commission for Taxes' remit and the natural and legal persons subject to them. It shall not apply to customs duties and clearance procedures governed by a specific law, or to pension and social security contributions except where their governing law expressly refers to it.
Article (4) — Definitions
For this Law: Ministry means the Ministry of Finance; Commission means the General Commission for Taxes; Director-General means its Director-General; taxpayer means any person on whom the law imposes a tax obligation; return means the statement submitted by a taxpayer of their tax base and liability; self-assessment means the taxpayer's calculation of tax due under the law; audit means examination of the accuracy of a return or information; tax debt means tax, surcharge or administrative fine finally due; tax number means the taxpayer's unique identifier in the national tax register; platform means the Commission's official electronic system.
Article (5) — Principle of Tax Legality
No tax or charge of a tax nature may be imposed, nor its base, rate or exemption amended or abolished, except by law. Regulations or instructions shall not create new substantive tax obligations or expand liability beyond the legislative text.
Article (6) — Fairness, Neutrality and Proportionality
Taxes shall be administered according to equality before the law; ability to pay where substantive legislation so provides; neutrality between economically equivalent legal forms; proportionality between administrative tools and actual risks; non-discrimination; good faith; and protection of the minimum needed for living and assets essential to practising a profession during enforced collection, in accordance with the law.
Article (7) — Certainty and Non-retroactivity
Substantive tax rules shall not apply retroactively to a taxable event completed before entry into force unless expressly more favourable to the taxpayer. Procedural rules shall apply immediately to procedures begun after entry into force, preserving legal positions and time periods completed under the previous law.
Article (8) — Interpretation
Tax provisions shall be interpreted to achieve legislative intent without using analogy to create liability or penalties. Where material ambiguity remains unresolved by accepted interpretation methods, legal certainty shall be respected and no obligation imposed that a taxpayer could not reasonably foresee.
Chapter Two — Commission and Governance of Tax Administration
Article (9) — Continuation and Mandate of the Commission
The General Commission for Taxes shall continue as a formation of the Ministry of Finance. It shall administer the taxes covered by this Law, develop procedures, manage the tax register, receive returns and payments, conduct audits, manage debts and refunds, and provide technical opinions on tax legislation and policy. This Law shall not create a parallel apparatus.
Article (10) — Separation of Policy and Implementation
The Ministry of Finance shall formulate tax policy and propose legislation; the Commission shall implement laws and administer compliance and collection. Policymaking and individual taxpayer assessment shall be functionally separate to prevent unlawful intervention in specific cases.
Article (11) — Functional Structure
The Commission's units shall be realigned around core tax administration functions, particularly registration, taxpayer services, returns and payments, compliance risk management, auditing, collection, refunds, large taxpayers, tax fraud investigation, administrative review, data and digital transformation, and internal oversight.
Article (12) — Taxpayer Segmentation
The Commission may segment taxpayers into large, medium, small and micro taxpayers and specialist sectors under published criteria considering turnover, assets, risks and activity type. Segmentation shall not discriminate in rights or create a tax without legislation.
Article (13) — Strategic Plan
The Commission shall adopt and publish a multi-year strategic plan with objectives for registration, compliance, services, collection, digitalisation, risk management and human resource development. It shall publish an annual report on results, deviations and corrective actions.
Article (14) — Technical Independence in Individual Cases
Directing an official to increase or decrease a particular taxpayer's assessment for political, personal, electoral or other non-tax considerations is prohibited. General technical directions shall be written and traceable and shall not replace the facts and evidence in an individual case.
Article (15) — Code of Conduct and Conflicts of Interest
The Commission shall issue a binding code of conduct addressing conflicts of interest, gifts and benefits, relations with taxpayer representatives, confidentiality, use of electronic systems, rotation in high-risk posts, and reporting of attempted improper influence.
Article (16) — Internal and External Oversight
The Commission shall be subject to financial and legal oversight under existing legislation and to the Federal Board of Supreme Audit and Federal Commission of Integrity within their respective mandates. It shall maintain risk-based internal auditing covering information security, refunds, assessments, collection, procurement and digital systems.
Chapter Three — Taxpayer Rights, Obligations and Services
Article (17) — Taxpayer Rights Charter
The Commission shall guarantee each taxpayer professional and impartial treatment, knowledge of the basis of liability, access to services and information, representation by an agent, data confidentiality, an opportunity to be heard before an adverse decision where possible, a reasoned decision, objection and appeal, and recovery of sums collected without entitlement within statutory periods.
Article (18) — Taxpayer Duties
Taxpayers shall register when conditions are met, submit accurate returns and information on time, retain records, pay sums due, enable the Commission to exercise lawful powers, and refrain from concealing material facts or fabricating documents, invoices or sham transactions.
Article (19) — Assistance and Clarity
The Commission shall provide guides, forms, frequently asked questions, indicative calculators and free support in Arabic and other languages it determines necessary, in accessible formats for persons with disabilities. General instructions shall be available electronically before application unless legal necessity requires otherwise.
Article (20) — Service Standards
The Commission shall publish time standards for registration, answers to enquiries, certificates, refund processing, determination of objections and data updates, and periodically report compliance rates.
Article (21) — Tax Agent and Representative
A taxpayer may authorise a lawyer, accountant, tax agent or other person under the law to act on their behalf. Authorisation shall not release the taxpayer from responsibility for information they adopt unless forgery or fraud by the agent without their knowledge is proven.
Article (22) — Decisions and Reasons
Every tax decision creating a debt, refusing a refund, imposing a penalty or amending a return shall be written or electronic and state the facts, legal basis, calculation method, right and deadline for objection, and competent body.
Article (23) — Guidance and Advance Rulings
A taxpayer may request an advance tax ruling on a specific transaction before carrying it out. The ruling shall bind the Commission within the facts fully disclosed by the taxpayer unless the law changes or concealment of a material fact is proven. The Commission shall publish anonymised summaries of advance rulings of general value.
Article (24) — Service Complaints
The Commission shall establish a taxpayer rights office within its structure to receive complaints about delay, conduct, service and access to information, functionally independent of audit and collection units. It shall not replace objection or appeal concerning the underlying tax liability.
Chapter Four — Registration, Tax Numbers and Records
Article (25) — National Tax Register
The Commission shall establish a unified national taxpayer register using a unique permanent tax number. More than one number for the same person is prohibited except for technical purposes that do not create a separate tax identity.
Article (26) — Integration with Government Registers
Within legally necessary limits, the tax register may connect to the national identity card, commercial and company registers, real estate registration, vehicle records, social security and activity licensing bodies, reducing repeated documents and automatically updating taxpayer data, subject to confidentiality and authorised access rules.
Article (27) — Automatic Registration
Where reliable information establishes that registration conditions are met, the Commission may register a person automatically after notice and an opportunity to correct the data or establish non-liability. Registration alone shall not acknowledge a tax debt for an earlier period without the prescribed assessment procedures.
Article (28) — Data Updates
A taxpayer shall notify the Commission of material changes in name, address, activity, management, legal form or cessation of activity within thirty days. Updates may be made electronically.
Article (29) — Record-keeping
Taxpayers shall maintain accounting records, documents and invoices needed to substantiate transactions under requirements proportionate to the size and nature of activity. Electronic records may be accepted where source integrity, traceability and protection against tampering are ensured.
Article (30) — Retention Period
Records and documents shall be kept for five years from the end of the tax year or final resolution of a dispute, whichever is later. This shall extend to ten years where serious evidence of fraud, forgery or deliberate concealment exists.
Article (31) — Simplified Regime for Small Businesses
The Commission shall establish simplified accounting and procedural requirements for small and micro enterprises to reduce compliance costs without affecting tax amounts prescribed by law. A simplified tax regime involving a special base or rate may be created only by legislation.
Chapter Five — Returns, Assessment and E-invoicing
Article (32) — Self-assessment as the Norm
Self-assessment shall be the norm for taxes whose nature permits it. The taxpayer shall calculate the liability and submit a return within the deadline set by substantive law or instructions issued under its legislative delegation.
Article (33) — Electronic Returns
The electronic platform shall be the primary filing method. Temporary alternative channels may remain for groups shown to lack digital access. A return shall be received when a verifiable numbered and dated electronic receipt is issued.
Article (34) — Voluntary Correction
A taxpayer may correct a return within the period specified by this Law unless an audit concerning the corrected matter has begun. Penalties shall be reduced for voluntary disclosure of an error before notification of an audit measure; this shall not apply to forgery or artificial transactions.
Article (35) — Administrative Assessment
The Commission may make an administrative assessment where no return is filed or a return is shown to be unreliable, using the best available information and a reasonable, explainable method. Estimated assessment shall not be used as punishment or pressure. The taxpayer shall be notified of the reasons and the right to object.
Article (36) — Presumptions and Rules of Evidence
The Commission shall bear the burden of proving facts used to increase liability beyond the taxpayer's declaration. Where information or documents are inherently under the taxpayer's control and unjustifiably withheld, a rebuttable presumption may be drawn.
Article (37) — Electronic Invoices
The Commission shall establish a national e-invoicing and digital receipt system in phases reflecting technical readiness, taxpayer size and sector risks. It shall verify issuer identity, invoice number and date, and transaction value, without requiring disproportionate equipment from small businesses.
Article (38) — Phased Mandatory Invoicing
Mandatory e-invoicing shall begin with large taxpayers and higher-risk sectors, expanding according to a published timetable. Instructions shall set minimum technical data, outage procedures, and correction and cancellation mechanisms, without creating a new tax rate or base.
Article (39) — Pre-filled Data and Accounting Integration
Once the necessary infrastructure exists, the Commission may provide returns or fields pre-filled from withholding, invoice and third-party data. The taxpayer shall retain the right to review and correct them before adoption.
Chapter Six — Payment, Withholding and Refunds
Article (40) — Payment Channels
Taxes shall be paid through approved banking and electronic channels, with each payment posted directly to the taxpayer's account. Limited exceptions for non-electronic payment shall cover areas or circumstances lacking service, with controls preventing undocumented cash collection.
Article (41) — Receipt and Tax Account
The Commission shall issue an immediate receipt for every sum received and show it in the taxpayer's electronic account, identifying tax type, period, amount and any credit or debit balance.
Article (42) — Withholding at Source
Withholding systems shall continue where provided by law, with standardised forms, deadlines and remittance rules. The withholding party shall provide the beneficiary and Commission with annual or periodic statements of amounts paid and withheld.
Article (43) — Overpayments and Credit Balances
A taxpayer may recover any sum paid without liability or in excess of the tax due, or request an offset against another final tax debt. A refund shall not be withheld merely because an unrelated audit exists unless written reasons indicate a real risk to public funds.
Article (44) — Refund Period
The Commission shall determine a refund application within sixty days of complete documentation, extendable once by a reasoned decision in complex cases. If payment is delayed after final entitlement is established, the taxpayer shall receive delay compensation calculated at a reference rate set by general, published financial instructions.
Article (45) — High-risk Refunds
High-risk refunds may undergo prior checks under objective criteria, without automatically delaying all refunds. The Commission shall publish aggregate data on refund times and accumulated balances.
Article (46) — Payment by Instalments
A final tax debt may be paid by instalments if immediate payment would cause serious hardship and instalments improve collection prospects. A written repayment schedule shall be agreed, and a guarantee proportionate to the amount and risk may be required.
Chapter Seven — Information, Confidentiality and Data Exchange
Article (47) — Tax Confidentiality
Information, data, returns and records acquired through the Commission's work shall be confidential and used only for tax purposes or other purposes expressly authorised by law. Confidentiality duties shall continue after an employee's or agent's service ends.
Article (48) — Need-based Access
The Commission shall apply least-privilege access in electronic systems. Every access to a taxpayer file or extraction of its data shall be recorded in an immutable log, and unusual access patterns periodically reviewed.
Article (49) — Third-party Information
The Commission may request specific relevant information from public bodies, financial institutions, employers, economic platforms and others legally obliged to provide it, respecting professional confidentiality and constitutional and legal limits. Requests shall be proportionate to a legitimate tax purpose.
Article (50) — Domestic Automatic Exchange
Automatic data exchange channels with government bodies may be established where necessary to verify registration, filing and collection, under governance agreements specifying data type, purpose, retention period, responsibilities and audit logs.
Article (51) — International Exchange
Tax information may be exchanged with another state only under an effective agreement or authorising legal basis, respecting purpose limitation, confidentiality, reciprocity and treaty restrictions.
Article (52) — Publication and Open Data
The Commission shall publish statistics and aggregates that do not identify taxpayers, covering registrations, returns, payments, refunds, debts, audits, objections and performance indicators, supporting transparency, research and public policy.
Chapter Eight — Compliance Risk Management and Auditing
Article (53) — Compliance Risk Management
The Commission shall adopt a formal compliance risk framework identifying non-registration, non-filing, non-payment and inaccurate return risks, classifying them by likelihood and impact, and allocating resources accordingly instead of expanding random audits.
Article (54) — Audit Selection
Audit cases shall be selected using documented risk criteria, data analytics and verifiable information. Individual revenue targets or personal collection quotas encouraging unsupported increases in assessments are prohibited.
Article (55) — Audit Notice
The taxpayer shall be notified of the audit's commencement, scope, period covered, rights, duties and responsible unit, unless advance notice threatens an organised fraud investigation or risks evidence destruction. The reason for the exception shall then be documented.
Article (56) — Limits on Information Requests
Only information relevant to the audited period, tax and scope shall be requested. Any expansion in scope and its reasons shall be notified. Electronic copies and documents already available to a government body may be accepted without requiring resubmission unless necessary.
Article (57) — Entry and Search
An authorised Commission official may enter business premises at reasonable times under an assignment order to examine activity-related records and assets. A private dwelling may not be entered or searched without its occupant's consent or a judicial order under the law.
Article (58) — Audit Duration
The Commission shall set standard audit periods by type and complete audits without unjustified delay. Any substantial extension, its reasons and the new period shall be notified to the taxpayer.
Article (59) — Statement of Findings
Before an additional assessment, the taxpayer shall receive preliminary findings, grounds and evidence, with reasonable time to respond and explain. Responses shall be considered objectively, and the final decision shall state what was accepted or rejected and why.
Article (60) — Joint and Coordinated Audits
The Commission may coordinate audits with other federal bodies where a legal basis and public interest exist, preventing unnecessary duplication and defining each body's responsibilities and exchanged data.
Article (61) — Measuring the Tax Gap
The Commission shall develop periodic methods to estimate registration, filing, payment and inaccurate reporting gaps where data permit, using the results to improve policy and administration rather than presume an individual taxpayer's liability.
Chapter Nine — Combating Avoidance, Fraud and Tax Offences
Article (62) — Economic Substance
Tax laws shall recognise a transaction's actual economic substance where its legal form is shown to have been artificially designed primarily to avoid tax contrary to the provision's purpose. This rule shall not apply merely because a taxpayer chooses a less costly tax arrangement that is genuine and has a valid commercial purpose.
Article (63) — General Anti-abuse Rule
The Commission may disregard an arrangement or step lacking economic substance whose main purpose or one of its main purposes is to obtain a tax advantage contrary to legislative intent. The decision shall be made at a competent level, be reasoned, and be subject to objection and appeal.
Article (64) — Related-party Pricing
Transactions between related parties shall use the arm's-length price that independent persons would apply in comparable circumstances. Simplified, graduated documentation instructions shall consider business size and compliance costs. Advance pricing agreements may be concluded in large cases.
Article (65) — Disclosure of High-risk Structures
A law, or regulation based on clear legislative delegation, may require specified categories to disclose high-risk tax arrangements or beneficial ownership where needed to verify liability, without imposing disproportionate broad disclosures.
Article (66) — Voluntary Correction before Detection
A person making full disclosure of a non-fraudulent violation before an audit or investigation begins shall receive reduced administrative fines under a published schedule, while paying the principal tax and compensation due.
Article (67) — Fraudulent Tax Evasion Offence
A person commits tax evasion if, intending to avoid tax due, they use a forged document, keep two parallel sets of accounts to deceive, destroy records after a lawful request, fabricate a sham transaction or invoice, or fraudulently conceal material income. Mere accounting error or a reasonable difference in interpretation shall not constitute the offence.
Article (68) — Penalty for Fraudulent Evasion
A person convicted of tax evasion shall face imprisonment of not less than six months and not more than three years and a fine of between one and three times the proven evaded tax, or either penalty according to seriousness, in addition to paying the principal tax. The penalty shall be aggravated for organised group conduct, systematic forgery or repeat offending.
Article (69) — Liability of Legal Persons
Where an offence is committed in a legal person's name or interest through a decision or collusion by a director or de facto officer, the legal person may receive an appropriate fine and temporary exclusion from certain public benefits under the law, without prejudice to the offender's personal liability.
Article (70) — Investigation and Referral
The Commission's competent unit shall gather technical information and refer suspected offences to the competent investigative authority. The Commission shall not exercise criminal investigative powers legally reserved to judicial and security authorities.
Chapter Ten — Collection, Debts and Enforcement
Article (71) — Debt Becoming Collectible
A tax debt shall become collectible at its due date where arising from the taxpayer's return, upon expiry of the objection period for an unchallenged assessment, or upon a final decision in the dispute, without prejudice to collection of the undisputed portion.
Article (72) — Priority of Voluntary Collection
Collection shall begin with reminders, notices and explanations of payment and instalment options. Enforcement tools shall then be used progressively and only as needed. A harsher measure shall not be used immediately where a less intrusive measure suffices.
Article (73) — Set-off
The Commission may offset a final tax debt against a final taxpayer credit balance after notifying the taxpayer of the amounts and periods concerned.
Article (74) — Attachment and Enforcement
Attachment and enforcement against a debtor's assets shall follow this Law and Government Debt Collection Law No. (56) of 1977, as amended, or its replacement, respecting proportionality, notice, objection and protection of assets legally exempt from enforcement.
Article (75) — No Imprisonment Merely for Inability to Pay
No person shall be imprisoned merely for inability to pay a civil tax debt. This shall not prevent criminal liability for fraudulent evasion where its elements are established by a judicial judgment.
Article (76) — Travel Bans
The Commission may not impose an administrative travel ban merely because a tax debt exists. It may request a temporary judicial measure where there is a final debt and serious evidence of attempted flight or asset dissipation threatening collection. The measure shall be time-limited, appealable and lifted when its reason ceases or sufficient security is provided.
Article (77) — Tax Clearance
Tax clearance shall not be required for essential civil services. A law or clearly delegated regulation may require it for substantial government contracts, transfer of high-value assets or specified cases directly related to collection risk. Immediate electronic issuance shall be available where no final debt exists.
Article (78) — Writing Off Uncollectible Debts
A debt may be written off in the accounts under strict controls where collection is proven impossible after reasonable measures are exhausted, the debtor dies without an estate, or a legal person ceases without assets. Write-off shall not constitute exemption if assets subsequently emerge within the limitation period.
Chapter Eleven — Administrative Penalties and Limitation Periods
Article (79) — Penalty Principles
Administrative penalties shall be proportionate to the violation, harm, taxpayer's conduct, history and cooperation, distinguishing unintentional error, gross negligence and fraud. Two penalties of the same nature shall not be combined for the same act.
Article (80) — Late Filing
Unjustified late filing shall attract a graduated administrative penalty calculated as a percentage of unpaid tax, or a proportionate fixed sum where no tax is due, under a schedule issued by regulation. The regulation shall specify statutory minimum and maximum limits and shall not create a custodial penalty.
Article (81) — Late Payment
An overdue amount shall attract a periodic compensatory surcharge calculated by a published method linked to the cost of money without becoming excessive punishment. Calculation shall stop for periods of delay attributable to a proven Commission error.
Article (82) — Inaccurate Returns
Where taxpayer negligence causes an underpayment, a reduced proportional fine may be imposed, increasing for gross negligence or deliberate concealment, with appropriate exemption or reduction for voluntary disclosure and full cooperation.
Article (83) — Acceptable Excuses
A fine shall be waived wholly or partly for force majeure, serious illness, failure of the official system, proven administrative error or good-faith reliance on written official guidance, with reasons stated in the decision.
Article (84) — Assessment Time Limit
No additional assessment may be issued more than five years after the tax year's end, extended to ten years for fraud, forgery or deliberate concealment of a material fact. Lawfully notified audit measures shall interrupt the period for the period under examination.
Article (85) — Collection Limitation Period
The right to collect shall expire ten years after the debt becomes final unless interrupted by a valid enforcement measure, acknowledgment of debt or instalment agreement. The effects of interruption shall follow the law.
Chapter Twelve — Objection, Appeal and Dispute Resolution
Article (86) — Right to Object
A taxpayer may object to an additional assessment, refund refusal, administrative penalty or any final tax decision within thirty days of notification. Late objections may be accepted for an unavoidable excuse or defective notification.
Article (87) — No Full-payment Requirement
Acceptance of an objection or appeal shall not require payment of the entire disputed amount. The taxpayer shall pay the undisputed portion. Reasonable security for the disputed portion may be required where serious grounds establish a risk of non-collection.
Article (88) — Independent Administrative Review
An administrative review unit functionally independent of the unit conducting the audit or issuing the assessment shall hear the objection and may uphold, amend or annul the decision. Its decision shall be reasoned and issued within a standard period published by the Commission.
Article (89) — Administrative Settlement
Disputes over factual or evidentiary assessment may be settled before litigation where settlement is lawful, written and does not grant unsupported exemption from statutory tax. The Commission shall publish anonymised general principles from recurring settlements to ensure consistency.
Article (90) — Tax Appeal Panels
Tax appeal panels shall be formed under a judge nominated by the Supreme Judicial Council, with independent financial and tax experts who did not participate in the challenged decision. Their circuits, jurisdiction and procedures shall be set by law or regulation under this Law, ensuring independence and speed.
Article (91) — Judicial Appeal
An appeal panel's decision may be challenged in cassation before the Federal Court of Cassation within statutory periods and procedures. Challenge shall be limited to legal questions or serious defects in factual assessment and procedure.
Article (92) — Effect of Appeal on Collection
Collection of the disputed portion shall be suspended pending administrative review where the taxpayer pays the undisputed portion. The Commission may request a judicial protective measure upon proof of a real collection risk.
Article (93) — Publication of Principles
The Commission and appeal panels shall publish anonymised summaries of decisions establishing general principles, respecting confidentiality, to unify application and improve legal certainty.
Chapter Thirteen — Digitalisation, Data Governance and Operational Security
Article (94) — Unified Tax Platform
The Commission shall establish a unified digital platform covering registration, filing, payment, invoicing, tax accounts, refunds, correspondence, objections and agent services, with secure integration interfaces to relevant government systems.
Article (95) — Electronic Identity and Signature
Legally recognised verification, electronic identity and signature methods shall be used. An electronic act shall have the evidentiary status of a paper document where integrity and attribution requirements are met.
Article (96) — Transaction Log
The platform shall retain an auditable chronological record of every submission, amendment, access, decision, payment and refund, allowing responsibility to be traced and unauthorised alteration prevented.
Article (97) — Service Continuity
The Commission shall maintain a business continuity and disaster recovery plan, an alternative data centre or equivalent arrangements, and clear outage procedures. A taxpayer shall not be prejudiced by a proven failure of the official service.
Article (98) — Cybersecurity
The Commission shall apply information security controls appropriate to data sensitivity, including identity and access management, encryption, backups, penetration testing, incident management, supplier monitoring and mandatory staff training.
Article (99) — Automated Systems
Automated systems may be used for verification, matching and risk identification. A final decision creating a substantial debt or penalty shall not rely on unexplainable outputs. A taxpayer shall have the right to human review of a decision materially affecting them.
Article (100) — Technology Procurement and Independence
The Commission shall avoid dependence on a single technology supplier where possible. System contracts shall require knowledge transfer, state ownership and portability of data, technical documentation, security testing and maintenance continuity.
Chapter Fourteen — Transparency, Reporting and Federal Coordination
Article (101) — Annual Report
The Commission shall publish an annual report covering revenue collected by tax type, taxpayer numbers, timely filing and payment rates, refunds, accumulated debts, audits and results, objections and resolution times, complaints and service indicators, without disclosing individual data.
Article (102) — Tax Expenditure Report
The Commission shall cooperate with the Ministry of Finance on an annual report on tax exemptions, incentives and exceptions whose effects can be estimated, identifying legal basis, purpose, beneficiary group and estimated cost where data permit, enabling Parliament to assess effectiveness.
Article (103) — Revenue Estimation and Forecasting
The Commission shall provide the Ministry of Finance with documented data and methodologies to improve tax revenue forecasts, distinguishing in its reports the effects of legal changes, compliance, collection and economic factors.
Article (104) — Coordination with the Kurdistan Region and Governorates
Federal fiscal policy and tax provisions shall be implemented under the Constitution. Technical coordination mechanisms with the Kurdistan Region and governorates shall exchange data, prevent duplication within Iraq, and unify identifiers and procedures where necessary, respecting constitutional responsibilities.
Article (105) — International Tax Agreements
The Ministry of Finance, with the Commission and relevant bodies, shall negotiate double taxation and information exchange agreements under constitutional procedures. The Commission shall implement administrative obligations after an agreement enters into force.
Article (106) — Parliamentary Review
Every two years during the first six years after entry into force, the Ministry of Finance shall report to the Council of Representatives on implementation, including compliance, digitalisation, disputes, costs, effects on revenue and the private sector, and legislative recommendations.
Chapter Fifteen — Transitional and Final Provisions
Article (107) — Continuation of Substantive Tax Laws
Existing laws on income, property, vacant land, foreign oil company income, sales and other taxes shall remain effective in determining bases, rates, exemptions and liability until amended or replaced by later laws. This Law shall govern their administration procedures insofar as consistent.
Article (108) — Legislative alignment
Within twelve months, the Ministry of Finance shall prepare a draft package of amendments removing conflicts between this Law and dispersed procedural provisions in tax laws, particularly objection, notification, collection, confidentiality, penalties and records rules.
Article (109) — Repeal of Conflicting Procedural Provisions
Every tax procedural provision expressly conflicting with this Law shall be repealed when the replacement provision enters into force. Repeal shall not affect a tax amount, exemption or substantive right under a specific law unless the legislature so provides.
Article (110) — Phased Transition
The Commission shall complete the unified tax register and electronic account within eighteen months, roll out electronic filing and payment under a plan not exceeding twenty-four months, and phase in e-invoicing within thirty-six months, considering readiness and transitional exceptions.
Article (111) — Resource and Cost Plan
Within one hundred and eighty days, the Ministry of Finance and Commission shall prepare a funded three-year implementation plan covering technical infrastructure, human resources, training, cybersecurity, institutional change, procurement and funding sources, using existing resources before creating new posts or buildings.
Article (112) — Regulations and Instructions
The Council of Ministers and Minister, each within their mandate, shall issue implementing regulations and instructions within the specified periods. They shall not violate tax legality or diminish safeguards for objection, appeal and confidentiality.
Article (113) — Entry into Force
This Law shall enter into force ninety days after publication in the Official Gazette unless a transitional article specifies a later date for a particular technical provision.
Statement of reasons
This Law is enacted to modernise Iraq's tax system and unify its procedures; strengthen legality, fairness and certainty in tax application; improve the efficiency of the General Commission for Taxes; broaden voluntary compliance; adopt self-assessment, digital services, e-invoicing and risk management; reduce direct contact and paperwork; guarantee taxpayer rights to reasons, objection, appeal, refunds and confidentiality; and improve non-oil revenue collection by broadening compliance rather than imposing new taxes without legislation.
Explanatory memorandum
1. Why a Unified Procedures Law Instead of Replacing All Taxes Immediately?
Iraq's current system comprises multiple taxes and differing rules. Replacing them all with one substantive law would combine highly sensitive decisions on income, property, consumption, investment and social justice at one moment. The draft therefore separates two stages: first, unified administration and procedures; then successive substantive tax amendments after impact assessment. This limits risks of revenue disruption or an unmanageable transition for the private sector.
2. Why Retain the General Commission for Taxes?
The Commission has existed within the Ministry of Finance for decades. Its internal regulations, amended in 2019, confirm its role in imposing, assessing and collecting direct taxes and sales tax. A new authority would duplicate responsibility and consume transition time and costs, whereas reform can be achieved through reorganising functions, governance, data and skills within the existing institution.
3. Self-assessment and Risk Management
Self-assessment does not mean blind trust in taxpayers; it reallocates resources. Instead of spending administrative time manually assessing every file, taxpayers submit returns and the Commission directs audits towards higher-risk cases using data, matching and analytics. This reflects the logic of TADAT frameworks and modern tax administration practice.
4. Protecting Rights Does Not Mean Relinquishing Collection
Removing full payment before objection, limiting travel bans to judicial measures and prohibiting imprisonment merely for inability to pay do not weaken the treasury. They are matched by a unified tax register, digital invoicing, information matching, risk analysis, lawful attachment and enforcement, rules against artificial transactions, and precise criminalisation of fraudulent evasion. The purpose is to shift enforcement strength from broad administrative measures towards evidence, data and the courts.
5. Digitalisation and Invoicing
Electronic payments became part of Iraq's legal framework through Electronic Payment of Funds Services Regulation No. (2) of 2024, and the Commission already has electronic departments and systems. The draft builds on this environment, turning scattered digital initiatives into a legal obligation with a transition timetable, outage protection, access logs, cybersecurity and auditability.
6. Relationship to Tax Policy Reform
In its published Iraq assessments in 2024 and 2025, the International Monetary Fund noted low non-oil revenues and the need to strengthen tax administration, digitalisation and collection, alongside future options for reforming income and consumption taxes. This draft addresses the administrative and institutional component and does not automatically endorse higher rates or a general consumption tax.
Alignment with Existing Legislation
| Legislation | Relationship | Required Legislative Action |
|---|---|---|
| Income Tax Law No. 113 of 1982, as Amended | Contains detailed rules on assessment, objections, appeals, collection, travel bans, confidentiality and penalties. | Temporarily retain substantive provisions, transfer procedures to the unified law, and expressly repeal conflicts through an amendment package. |
| Property Tax Law No. 162 of 1959, as Amended | An existing tax administered by the Commission. | Align registration, notification, payment, objection and collection with the new Law. |
| Vacant Land Tax Law No. 26 of 1962, as Amended | One of the existing tax laws. | Subject general procedures to the unified law, retaining the tax basis until separate substantive reform. |
| Foreign Oil Companies Income Tax Law No. 19 of 2010 | A special regime for a category of companies. | Retain substantive rules while subjecting registration, filing, payment, audit and disputes to unified rules unless the sector requires a special provision. |
| Government Debt Collection Law No. 56 of 1977, as Amended | The general framework for enforcement of government debts. | Continue referring to it, giving priority to specific safeguards in the unified tax law where conflicts arise. |
| Ministry of Finance Internal Regulations No. 1 of 1990, Amended by Internal Regulations No. 2 of 2019 | Define the Commission's units and functions. | Amend the structure to match the functional model, risk management, independent review and digital data. |
| Electronic Signature and Electronic Transactions Law No. 78 of 2012 and Electronic Payment Regulation No. 2 of 2024 | The technical foundation for reliance on electronic transactions and payments. | Technical and legislative integration without duplicate regulation. |
Transitional Provisions and Implementation Requirements
Transition shall be phased so digitalisation does not disrupt collection or exclude taxpayers lacking technical means. The first stage cleans the taxpayer register, unifies tax numbers, creates electronic accounts, and adopts electronic payment and transaction tracking. Digital returns and connections with government bodies then expand, followed by phased e-invoicing according to taxpayer segments and sector risks.
Each stage shall be preceded by load, security and continuity tests, temporary alternative channels, training for employees, tax agents and accountants, and taxpayer awareness campaigns. Paper files shall remain acceptable for categories designated during transition, but shall be recorded digitally within the Commission to prevent two permanent parallel systems.
| Requirement | Maximum Period |
|---|---|
| Funded Implementation Plan | 180 Days |
| Legislative Alignment Package | 12 Months |
| Unified Tax Register and Account | 18 Months |
| Rollout of Electronic Filing and Payment under the Plan | 24 Months |
| Phased Expansion of E-invoicing | 36 Months |
Financial and Implementation Implications
The Law entails real transition costs, but public sources alone cannot estimate them accurately. The amount depends on existing systems, numbers of operational accounts, branches, servers and contracts, connections with government registers, and reusable infrastructure. The draft therefore avoids an artificial estimate and requires the Ministry of Finance and Commission to prepare a funded plan within 180 days.
Costs mainly comprise an integrated tax management platform or upgrading existing systems; data cleaning and migration; payment and government register connections; e-invoicing; cybersecurity and continuity; branch equipment and networks; training and change management; a taxpayer service and support centre; and improved audit and risk management capabilities.
Institutionally, the Law is expected to reduce paperwork and repeated visits, improve registration, filing and collection quality, and reduce leakage caused by weak data. It does not claim a specific financial return before an official baseline and measurement model distinguish administrative reform effects from other economic or legislative changes.
Relevant International Comparison
The design draws on shared principles of modern tax administration rather than copying a particular country's system. TADAT focuses on nine performance outcome areas: integrity of the taxpayer base, risk management, voluntary compliance support, filing, payment, accurate reporting, dispute resolution, revenue management, and accountability and transparency. This logic is clearly reflected in the draft's structure.
Recent OECD reports also document expanded electronic filing and payment, digital services, invoices and data from business systems, automated matching, and compliance risk management. The draft adopts these trends with safeguards for confidentiality, human review, explainable decisions and avoidance of disproportionate technical requirements for small businesses.
For Iraq, the proposal has additional relevance because the International Monetary Fund published a technical report in 2024 specifically on the General Commission for Taxes following an earlier TADAT assessment, identifying an existing modernisation path. The Law is therefore designed to turn administrative reforms into a stable institutional and legislative structure that can endure changes of government and administration.
Sources and references
- Iraqi Constitution — Iraqi Council of RepresentativesConstitutional basis, particularly Articles 28 and 110 concerning tax legality and federal fiscal policy.
- Income Tax Law No. 113 of 1982, as Amended — General Commission for TaxesThe existing framework for filing, assessment, objection, collection, confidentiality and penalties.
- Legal Legislation — General Commission for TaxesInventory of existing tax laws, regulations and instructions administered by the Commission.
- Internal Regulations No. 2 of 2019 Amending the Ministry of Finance's Internal Regulations — Iraqi Gazette 4558The current organisational mandate and units of the General Commission for Taxes.
- General Commission for Taxes — Ministry of FinanceThe Commission's current institutional functions within the Ministry of Finance.
- Government Debt Collection Law No. 56 of 1977, as Amended — Ministry of JusticeThe general government debt collection framework referenced by tax legislation.
- Electronic Payment of Funds Services Regulation No. 2 of 2024 — Central Bank of IraqThe current legal environment for electronic payments.
- Iraq: General Commission for Taxes — Strategic Direction for Prioritized Reforms — IMF, 2024A recent diagnosis of the Commission's modernisation path and tax administration reform priorities.
- Iraq: Selected Issues — A Roadmap for Raising Non-Oil Revenues — IMF, 2024A reform roadmap for non-oil revenues and tax administration in Iraq.
- Iraq: 2025 Article IV Consultation — IMFThe Fund's latest published assessment of the need to strengthen tax administration, digitalisation and collection.
- TADAT Framework and 2025 Field GuideStandards for registration, risk management, filing, payment, disputes, revenue management, transparency and accountability.
- Tax Administration 2024 — OECDModern tax administration practices in digital services, compliance risk management, auditing and collection.
- Tax Administration Digitalisation and Digital Transformation Initiatives — OECD, 2025Digital identity, application programming interfaces, invoicing, data and digital systems in tax administration.
POL-32 · Ali Zuweid's Political Programme · 5 October 2026