Iraq's Income Tax Law imposes an additional amount of 5% of the unpaid tax if the taxpayer is more than 21 days late in payment from the date of notification, and this amount is doubled if the delay continues for a further 21 days. A fine of between 10% and 25% of the assessed income is also imposed for violating the commercial bookkeeping system, along with an additional 10% of the tax due on anyone who fails to file their tax return on time.

The Surcharge for Late Payment of Tax

The law provides that if the tax is not paid within 21 days from the date it is notified, an additional amount of 5% of the tax is added, and this amount is doubled if the tax is not paid within a further 21 days after the first period elapses. The Minister, or whomever they delegate, may exempt the taxpayer from all or part of the additional amount if satisfied that the delay was due to the taxpayer's absence from Iraq, an illness that incapacitated them, or another compelling reason, and the Minister may also refund the additional amount if it has already been paid where one of these reasons is present.

The Fine for Violating the Commercial Bookkeeping System

Anyone who commits a violation of the provisions of the commercial bookkeeping system for income tax purposes is fined at a rate ranging between 10% and 25% of the assessed income before deducting the legally prescribed allowances, provided the fine is not less than 500 dinars.

The Surcharge for Late Filing of the Tax Return

The tax authority imposes an additional amount of 10% of the tax due, not exceeding 500 thousand dinars, on a taxpayer who fails to file, or refuses to file, the income tax return by the end of May each year, or who causes a delay in completing their income assessment, unless it is proven that the delay was due to a legitimate excuse.

The Mechanism for Collecting the Tax and Additional Amounts

A taxpayer's exposure does not stop at the additional amount being imposed: the tax and the additional amounts arising from it are collected under the Law on the Collection of Government Debts, which gives the tax authority compulsory collection tools similar to those prescribed for debts owed to the state, not merely ordinary administrative measures.

Losing the Installment Option After Missing a Payment

The tax authority may allow a taxpayer to pay assessed tax in installments upon a written request, if it finds justified grounds to do so, but this benefit is conditional on regular payment: if the tax is paid in installments and the taxpayer fails to pay one of the installments within 21 days of its due date, all the installments become automatically due and payable without the need for a warning, while the provisions on the additional amount for late payment continue to apply.

Other Violation Fines and Criminal Penalties

The law imposes a fine of not less than one hundred dinars and not more than five hundred dinars on anyone proven before the competent courts not to have performed the duties imposed on them under the law or the regulations issued under it, or to have refused or delayed submitting a statement or information to the tax authority that they were required to submit. In more serious cases, the penalty extends beyond a fine to imprisonment: anyone proven before the competent courts to have used fraud or deceit to evade payment of all or part of the tax is punished with imprisonment for a period ranging between three months and two years.

Legal References