Dissolved Revolutionary Command Council Resolution No. 36 of 1997 imposes a tax called the sales tax at a rate of 10% on the value of all services provided by deluxe- and first-class hotels and restaurants, and the tourist facility's management is responsible for collecting it and remitting it monthly to the Ministry of Finance within the first ten days of the following month.

The Tax Rate and Its Scope

The Resolution provides for the imposition of a tax called the sales tax at a rate of 10% on the value of all services provided by deluxe- and first-class hotels and restaurants. Under the financial instructions implementing this Resolution, the General Commission for Taxes is responsible for collecting this tax and following up on its collection, through a specialized division called the Sales Tax Division, which keeps records of the names of the covered tourist facilities and monitors and audits the collection of the tax.

Obligations of the Tourist Facility's Management

The management of a covered tourist facility must issue invoices showing the value of the services provided and the amount of sales tax collected, calculated as the specified percentage of the total invoice amount, record the tax amounts for the account of the General Commission for Taxes, and deliver them to the Commission within the first ten days of the month following the month in which the tax arose.

Collection in Foreign Currency and Liability for Non-Remittance

When a tourist facility collects its service fees in foreign currency, the sales tax percentage collected in that currency must be converted into Iraqi dinars at the market exchange rate announced by the Central Bank of Iraq, and these amounts are recorded for the account of the General Commission for Taxes. Sales tax amounts collected under these instructions are not subject to the percentage of foreign currency that tourist facilities are otherwise entitled to retain, meaning they remain separate from any foreign-currency retention scheme those facilities may benefit from. The tourist facility's management also bears the bank interest on the overdraft account for tax amounts collected but not remitted within the specified period, as well as the tax and bank interest amounts if the tax was not collected at all.

Records and Oversight by the General Commission for Taxes

Tourist facilities covered by these instructions must keep the records necessary to substantiate the sales tax amounts collected, and these records are subject to inspection and audit by the General Commission for Taxes at any time to verify the correctness of the tax's collection, enabling the Commission to monitor each tourist facility's compliance with the Resolution and its implementing instructions individually.

The Effective Date of the Resolution and Its Instructions

The financial instructions implementing this Resolution were published in the Official Gazette and provided that they take effect from 1/6/1997, which is the same date the dissolved Revolutionary Command Council Resolution No. 36 issued on 4/5/1997 itself took effect, meaning the tax and its collection mechanism became effective simultaneously from the first day the Resolution applied.

Legal References