Updated on: 2025/08/04 14:03 (UTC)
Overview
Iraq, which officially is known as the Republic of Iraq, is a parliamentary democracy located in the Middle East. The countries that border Iraq are Turkey to the north, Iran to the east, Kuwait to the southeast, Saudi Arabia to the south, Jordan to the southwest, and Syria to the west. The Persian Gulf borders Iraq to the country’s southeast. The legal system in Iraq is a mix of both civil law and Sharia law.
Iraq’s currency is the Iraqi dinar.
The territory within Iraqi borders known as Kurdistan has been granted a certain amount of autonomy from Iraq and has separate governance for many employment-related issues.
Iraqi employers are required to withhold income taxes and social taxes for employees and uphold compensation and benefits laws.
Foreign workers living in Iraq a certain period of time must pay taxes on their income received during their stay in Iraq at the same progressive rates as Iraqi nationals. However, foreign nationals with residence in Iraq only pay tax on Iraq-sourced income. Foreign nationals are covered by the same Labor Code as Iraqi citizens.
Iraqi residents working in the United States are covered by U.S. tax law with possible work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.
CURRENCY DETAILS
The currency of Iraq is the Iraqi dinar (). The internationally recognized three-letter currency code for the Iraqi dinar is IQD, which also is one of the currency’s commonly used currency symbols. The plural form of Iraqi dinar is Iraqi dinars.
When an amount of Iraqi dinars is written using the currency symbol , the symbol generally follows the numerical value with a space between the numerical value and symbol. The manifestation of the aforementioned placement treatment in Modern Standard Arabic, which is the primary written language used in Iraq and involves a right-to-left writing system, is that the currency symbol appears to the left of the numerical value with a space between the numerical value and symbol. The currency symbol has a variant in which each of the two Arabic letters within the currency symbol has a dot (.) to its left instead of just one dot being present in the symbol, and the placement treatment of this variant is the same as that of the currency symbol . Despite the aforementioned general placement treatment of the currency symbol , the currency symbol , and its variant with a dot to the left of each of the two Arabic letters within the currency symbol, sometimes in Arabic as used in Iraq precedes the numerical value and as per the right-to-left nature of the language appears to the right of the numerical value.
When an amount of Iraqi dinars is written using the currency symbol ID or the currency symbol IQD, the symbol either precedes or follows the numerical value with a space or no space between the numerical value and symbol.
The primary subdivision of the Iraqi dinar is based on one thousandth ( 1 ⁄ 1,000 ) instead of one hundredth ( 1 ⁄ 100 ), which is the primary subdivision basis of the vast majority of currencies. One thousandth ( 1 ⁄ 1,000 ) of an Iraqi dinar is referred to as a fils, with a plural form that is the same as its singular form and a plural form of fulus, with usage depending on context, although transactions involving Iraqi currency do not typically include amounts other than whole numbers of Iraqi dinars.
When amounts of Iraqi dinars are written in Modern Standard Arabic, the numerals are arranged in a left-to-right convention instead of Modern Standard Arabic’s general right-to-left convention, and the comma that in English separates the thousands place from the hundreds place generally is not rendered, with the numbers in the thousands place and hundreds place having no symbol or space between them and instead adjacent to each other. However, with regard to Arabic as used in Iraq, a comma, dot (.), or space, or an Arabic-language symbol () known as the Arabic thousands separator, sometimes is present between the thousands place and hundreds place.
TAXES
The federal government generally enacts laws relating to income tax and social taxes and benefits.
The tax year in Iraq is the calendar year, Jan. 1 to Dec. 31.
Kurdistan, an autonomous region in Iraq, implements its own income tax and social tax laws, which are similar to federal Iraqi laws with some differences. Kurdistan laws must be specifically followed within the region to avoid fines for lack of compliance.
Income Taxes
The income tax in Iraq is administered by the Ministry of Finance and the General Commission for Taxes.
Coverage: Employees are subject to Iraq income tax if they have spent four months or more during a tax year in Iraq and have accrued income. Generally, residents are taxed on worldwide income.
Nationals of Arab countries who reside in Iraq are subject to income tax despite their length of residence.
Nonresidents living in Iraq for six months or more within a tax year or four consecutive months are subject to Iraq’s income tax.
Employees: Employees are defined as any individual working in return for wages under the authority of an employer.
Rates and Thresholds: Income tax rates are levied on a progressive scale, with rates ranging from 3% to 15%.
Iraq’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:| Range of Annual Income (Iraqi Dinars) | Income Tax Rate |
|---|---|
| Up to 250,000 | 3% |
| More than 250,000 and up to 500,000 | 5% |
| More than 500,000 and up to 1 million | 10% |
| More than 1 million | 15% |
Registration: Employers are required to register with and receive a tax clearance certificate from the General Commission for Taxes. Individuals are also required to register with the General Commission for Taxes.
Taxable Amounts: Taxable income includes any gains from commercial activity, interests, commissions, land rentals, salaries, bonuses and allowances.
Salary for annual leave and expenses paid to employees for injury or death are not taxable.
Pension contributions are tax-deductible.
Withholding Methods: Employers are required to withhold income taxes from employee’s paychecks at the time of payment.
Returns and Remittance: Income taxes must be paid by the 15th of the following month for which taxes have been withheld. Employers submit returns for their employees for income and any income other than salary and allowances by March 31 for the year of assessment.
All individuals, even if they are not registered with the Financial Authority, are required to file an annual income tax return by June 1 for the year of assessment.
Recordkeeping: Tax records must generally be kept for a minimum of five years.
Penalties: Failure to comply with the tax law can result in fines ranging from 100 to 10,000 , imprisonment from three months to up to two years, or both.
Failure to file an annual income tax return can result in a fine of 10% of the tax owed.
Social Taxes
Social Security in Iraq includes health insurance, work accident insurance, pension insurance and social services insurance. Social taxes are prescribed by the Pension and Social Security Law for Workers and are administered Ministry of Labor and Social Affairs.
Employees are entitled to pension funds under the following circumstances: if a male is 60 years of age and has completed 20 years of insured service, if a woman is 55 years of age and has completed 20 years of insured service, or if a man has completed 30 years of insured service and a woman has completed 25 years of insured service.
Coverage: Any employer employing one or more individual must participate in the social security program.
Rates and Thresholds: Generally, employers must contribute a total of 12% of an employee’s salary to social security: 1% for health insurance, 3% for work accidents and 9% for pension. Employers with employees in the oil and gas sectors must contribute 25% of the employee’s salary.
Employees are required to contribute 5% of their salary to social security.
Registration: Employers are required to apply for and obtain “Assurance ID” cards for their employees that are covered by Social Security.
Taxable Amounts: Social taxes are assessed on all income received by the employee.
Withholding Methods: Employers are required to withhold social tax contributions from an employee’s paycheck.
Returns and Remittance: Social taxes must be withheld and remitted monthly by the first of the following month for which payments are due.
Penalties: Employers who do not remit social taxes on time are subject to a fine of 2% of the owed amount for each month that the payment is late. Additionally, falsifying documents can be punished with fines over 50,000 . Imprisonment for six months and longer in addition to fines can be used as a penalty when an individual poses as another to receive benefits.
The Penal Code further outlines penalties in Iraq.
Other Taxes
Iraq’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.
State/Jurisdiction Taxes
Kurdistan, the autonomous region of Iraq, has separate administrative bodies for income taxes, social taxes and labor affairs. The requirements specific for this territory are promulgated and enforced by the Kurdistan Regional Government. Based on the Kurdistan Law of Taxation, employers are required to pay and withhold from wages personal income tax and social security contributions. Residents of Kurdistan and nonresidents from countries other than Iraq but who are working in Kurdistan are subject to the income tax and social tax provisions of Kurdistan, but generally not of broader Iraq.
Income taxes in Kurdistan are administered by Kurdistan’s Ministry of Finance and Economy in addition to the Income Tax Directorate. Employers are required to withhold a personal income tax rate of 5% of the amount of each employee’s annual income that exceeds 1 million . Nonresident employees in Kurdistan are subject to a personal income tax rate of 15%.
Social security and other labor requirements are administered by the Ministry of Labor and Social Affairs in Kurdistan. Employers are required to withhold 5% of employees’ salaries for social security contributions. Employers are additionally required to pay 12% of employees’ salary in social security contributions.
COMPENSATION AND BENEFITS
The Labor Law, administered by the Ministry of Labor and Social Affairs, includes regulations regarding minimum wage, overtime, hours of work, holidays, leave, wage payment and termination pay. Worker’s Compensation and retirement plans are covered under social taxes.
Labor Law No. 37 of 2015 has been effective in Iraq since Feb. 7, 2016.
Minimum Wage
Effective since Jan. 1, 2018, the minimum wage in Iraq generally is 350,000 per month.
In the Kurdistan region, the monthly minimum wage is 285,000 .
Overtime
Overtime worked during a normal working day (work performed beyond eight hours) is to be remunerated at one and a half times the normal rate of pay. Work done at night, on a weekly rest day, or a holiday must be remunerated at twice the amount of normal pay. Employees working on the rest day or a holiday are to be given another rest day during the week to replace it. Overtime is generally limited to four hours per day for non-industrial work or one hour per day for industrial work, subject to maximums of 40 hours in a 90-day period and 120 hours in a one-year period.
Hours of Work
The maximum work day generally is limited to eight hours per day or 48 hours per week. For work that is harmful to health according to the Ministry of Labor and Social Affairs, the maximum working day is seven hours.
Employers must provide employees with a break of 30 minutes to one hour so that employees do not work more than five consecutive hours without a break. Employees must also receive a rest period of at least 11 consecutive hours between working days. For female workers, the rest period must generally include at least seven hours of night work.
Employees must receive a paid weekly rest day of at least 24 consecutive hours, generally Friday, but another day can be substituted.
Night work is defined as any work done between the hours of 9 p.m. and 6 a.m. Maximum hours worked during night work should not exceed seven hours, and female employees are not generally permitted to perform night work. If an employee’s shift includes both day and night work, the maximum hours worked should not exceed 7.5 hours, with a maximum of three hours of night work.
Holidays
Mandatory public holidays, to which employees are entitled a day off with full pay, are as follows in Iraq:
- Jan. 1: New Year’s Day
- Jan. 6: Iraqi Army Day
- March 21: Festival of Spring
- May 1: Labor Day
- July 14: Republic Day
Iraq also recognizes several Islamic Holidays, which differ by date on the Gregorian calendar each year as they are determined by the lunar calendar. These holidays are as follows:
- Islamic New Year
- Ashura
- Mawlid Al-Nabi (Prophet’s Birthday)
- Eid Al-Fitr (end of Ramadan, 3 days)
- Eid Al-Adha (Festival of Sacrifice, 4 days)
Kurdistan, the autonomous region of Iraq, also recognizes the following additional holidays:
- March 5: Uprising Day
- March 11: Liberation of Erbil City
- March 14: Mustafa Barzani’s Birthday
- March 21-23: Kurdish New Year, Spring Equinox
- April 9: Baghdad Liberation Day
- Dec. 25: Christmas Day
Leave
Employees generally are entitled to 21 days of paid annual leave. Employees working in positions harmful to their health are entitled to 30 days of paid leave annually. The amount of leave an employee is entitled to each year increases by two days after five and after 10 years of service, and then by three days for every subsequent five years of service.
Sick Leave: Employers must reimburse employees for the numbers of days an employee misses due to sickness, but only after an employee obtains a medical certificate for sick leave which includes the number of days of sick leave can be taken according to a physician. Employers must reimburse employees for the number of days the physician has noted up to a maximum of eight days at one time. Employers must reimburse employees for up to 30 days of paid sick leave in a year, and after 30 days, social security covers sick pay.
Maternity Leave: Female employees are entitled to up to 14 weeks of maternity leave, of which six weeks must be after the female employee has given birth. This time period can be extended for multiple births or difficult births up to a total period of nine months.
Employers must remunerate employees with full pay during the normal allowed period of maternity leave. Extra leave taken will be remunerated as sick leave.
Nursing mothers are entitled to a paid break of an hour each day.
Child Care Leave: Women with one or more children under six years old may take three days of leave without pay to care for a sick child.
Personal Leave: Employees are entitled to five days of paid leave for their marriage; one day of paid leave for the marriage of their child; or five days of paid leave for the death of a parent, spouse, spouse’s parent, sibling, or child.
Wage Payment
Wages must be paid once a week at the end of the week or once a month at the end of the month to an employee at the place of work or at a nearby pay office, with a maximum delay of five days from those deadlines. Wages must generally be paid in Iraqi dinars unless the employment contract specifies otherwise.
Bonuses and Special Benefits
Iraq does not require employers to provide bonus payments to employees.
Termination Pay
Employees generally may terminate a contract with 30 days’ notice. If 30 days’ notice are not given, the employee owes the employer compensation equal to their salary for the time of notice not given.
When an employee ceases working, an employer must provide the individual’s final wages within seven days. Employees are also generally entitled to severance pay of two weeks of wages for each year of service. If an employee dies, the worker’s family is entitled to two months of wages, provided that the employee worked for the employer for at least a year.
Workers’ Compensation
Workers’ Compensation is regulated by the Pension and Social Security Law. More information is covered under social taxes.
Recordkeeping
All documents must be kept in Arabic except in the region of Kurdistan, where documents can be kept in Kurdish languages.
FOREIGN WORKERS
Foreign workers are generally covered under the same tax and workplace laws as Iraqi citizens.
Visas: Foreign workers are required to obtain a visa for foreign nationals before arriving in Iraq to work from an Iraqi Consulate. Foreign workers must also obtain a work permit, regulated by the Ministry of Labor and Social Affairs, before engaging in employment in Iraq. A multiple entry visa can be applied for once a foreign worker is in Iraq, which is regulated by the Ministry of the Interior in Iraq.
Taxes: Nonresident workers are taxed on the same progressive scale as resident workers, from 3% to 15% depending on level of income.
Nonresidents working in Kurdistan must follow Kurdish laws in regards to tax residence and income and social taxation.
Wages/Payments: Wages are generally paid in Iraqi dinars, but if wages are paid in another currency, the employer must still follow Iraqi wage payment rules.
WORKING IN THE UNITED STATES
Foreign workers from Iraq must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.
Note: An executive order released Jan. 29, 2016, temporarily suspends from entry nearly all travelers, except U.S. citizens, traveling on passports from Iraq.
For tax purposes, Iraqi citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they work under specific visa types that exempt earnings from taxes.
State and local taxation of Iraqi workers also can apply.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes: Generally, nonresidents in the U.S. who are from Iraq and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends. A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer.
All nonresidents in the U.S. who are from Iraq and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c. Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.
Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: Iraq and the U.S. do not have a tax treaty.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.
Totalization Agreements: Iraq and the U.S. have not entered into a totalization agreement.
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
Iraq does not have either an income tax treaty or a totalization agreement in effect with the United States.
Iraq has a bilateral income tax treaty in effect with Egypt.
Iraq’s bilateral income tax treaty with Hungary generally takes effect Jan. 1, 2022.
A multilateral income tax treaty, the Council of Arab Economic Unity (CAEU) double taxation avoidance treaty, is in effect for Iraq and 10 other countries: Egypt, Jordan, Libya, Mauritania, Palestine, Somalia, Sudan, Syria, United Arab Emirates, and Yemen.
Iraq has entered into a totalization agreement with France.
RESOURCES
All resources are in English unless otherwise noted.
General
U.S. State Department: U.S. Relations With Iraq
CIA World Factbook: Iraq
Republic of Iraq National Investment Commission
Kurdistan Board of Investment
Currency Details
International Organization for Standardization: Currency Codes - ISO 4217
Unicode Consortium: Currency Symbols
United Nations: United Nations Terminology Database: Iraq
Taxes
Iraq Ministry of Finance
General Commission for Taxes (Arabic)
Iraq Income Tax Law
Iraq Pension and Social Security Law
Kurdistan Ministry of Finance and the Economy
Compensation and Benefits
Iraq Labor Law (Arabic)
Decision on Minimum Wage, Iraq General Secretariat for the Council of Ministers
Iraq Ministry of Labor and Social Affairs (Arabic)
Holidays in Kurdistan, Kurdistan Regional Government
Embassy of the United States in Baghdad: Holidays
Foreign Workers
Embassy of the Republic of Iraq
Iraq Ministry of Foreign Affairs (Arabic)
Working in the United States
U.S. Department of Labor:
- Foreign Labor Certification
- Hiring Foreign Workers
U.S. Internal Revenue Service:
- IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
- IRS Publication 15, Circular E, Employer’s Tax Guide
- IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS Publication 519, U.S. Tax Guide for Aliens
- IRS Publication 901, U.S. Tax Treaties
Treaty Arrangements