Double Taxation Agreement Iraqadmin
Iraq has tax agreements with other countries in the Middle East. From 2020, the United States and Iraq will not have a tax treaty. Their foreign taxes in the United States can be reduced by tax credits and deductions related to income collected in Iraq. The following can relieve some of the double taxation that occurs when you have to pay U.S. taxes on the same income: whether you are an American expatriate living in Kurdistan or other parts of Iraq, you will find that corrupt practices are common. In Iraq, it is customary to find differences between tax rules and accepted daily practices. The following information should help you understand U.S. taxes for expats living in Iraq and how current Iraqi tax rules will affect you. Those who are not Iraqi nationals and who receive income from an Iraqi source are subject only to their income from Iraq.
Income tax rates in Iraq are progressive and are at a maximum rate of 15%. Progressive interest rates are used in many countries, including the United States. This means that lower rates apply to incomes at lower levels. The tax rate gradually increases when income reaches certain thresholds. An Iraqi who lives in Iraq for at least four months is considered a resident. The rules of residence are slightly different for non-Iraqi nationals. Those who come from countries other than Iraq and live there for at least four consecutive months, for a total of six months per year, are considered Iraqi residents. You are also considered a resident of Iraq if you are employed by an Iraqi institution. For the purposes of expat taxes, if you work in Kurdistan, you must first be considered a tax resident in order for your income in Kurdistan to be subject to Iraqi tax.
Iraq is struggling to leave war and dictatorship behind, and these battles affect many facets of Iraq`s daily life. Some Iraqi leaders are trying to modernize their laws, but in Iraq, change is slow. Life in Iraqi Kurdistan is different from other regions. Kurdistan has its own regional government and laws, and it has worked hard to establish a business-friendly identity. The due date for those who must file an Iraqi tax return is May 31. According to the law, an Iraqi tax return is required if you are subject to Iraqi tax. However, in practice, it may be acceptable for your employer who has withheld and contributed your tax to file a tax return for your return application. For more information on your expat taxes while you are in Iraq or to prepare your tax return for Greenback Expat Tax, please contact us.