Worldwide transfer pricing reference guide 2014

Iraq
Taxing authority and tax law
Taxing authority: General Commission for Taxes (GCT).
Tax law: Law No. 113 of 1982, as amended.
Relevant regulations and rulings
Currently, there are no transfer pricing regulations in Iraq. However, the GCT expects that all transactions with related parties should be
entered under the usual commercial rates as in contracts with unrelated third parties.
The GCT conducts a tax audit of each annual tax filing (audited financial statements prepared under the Iraqi Unified Accounting System
and a tax return form) and will ask for any supporting documentation it deems necessary.
Finally, the GCT actively employs a deemed tax mechanism based on its own estimation of a reasonable profit (a deemed profit); this is
the default position of the GCT despite the requirement to file audited financial statements. Consequently, the Iraqi tax authorities rely
on the simplified method of applying a deemed tax to ensure that at least a minimum level of tax is paid in Iraq.
Iraq has entered into a bilateral double taxation treaty with Egypt and a multi-lateral double taxation treaty with the states of the Arab
Economic Union Council. In practice, and with respect to Iraq taxation, it is not recommended to rely on a position based on a tax treaty
between Iraq and another country, as GCT does not look to the treaties nor does it apply their provisions.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
The likelihood of an annual tax audit in general is high and is mandatory for all tax filings.
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