The Legal Framework of Direct Tax Deduction Between the Public and Private Sectors in Iraq

Abstract

This study explores the differences and disparities in the direct deduction of income tax (salaries, rents, and fees) for employees and workers in the public and private sectors in Iraq and the Kurdistan Region. It begins by defining tax, direct tax deduction, and its characteristics, followed by an examination of the legal framework and relevant guidelines in both Iraq and the Kurdistan Region, focusing on the differences in rates and percentages between the two systems.

The research highlights the inconsistencies in tax treatment between the public and private sectors within both Iraq and the Kurdistan Region and illustrates how these discrepancies also vary between the two jurisdictions. Such differences contradict the principles of tax equity and the constitutional principle of equality as outlined in the 2005 Iraqi Constitution.

The study further analyzes the mechanisms and obstacles related to the implementation of tax deductions, assesses decisions and positions issued by the Council of Ministers and the Ministry of Finance, and addresses taxpayers’ rights. Finally, the research offers suitable recommendations and proposals to resolve these disparities, enhance state revenues through taxation, and strengthen public trust in the tax system.