KPMG in Iraq summarizes developments regarding obligations of retaining the accounting books related to tax payers’ business in their working place or any other place in Iraq, compliance requirements of the general commission for taxes with regards to payroll, corporate, and withholding taxes and Social security development.
- An important circulation was issued by “The Board of Accounting and auditing profession-oversighting” concerning the instructions related to obligations of accounting books retention in Iraq.
The circulation issued, addressed to the Central bank and to the general commission stating that:
“It was confirmed that the financial managements and book keeping custody for most of the foreign company’s branches in Iraq are located out of Iraq, contrary to the regulation. Accordingly you are requested to oblige retaining the commercial records, vouchers and correspondences related to tax payers’ business in their working place or any other place in Iraq confirmed within the Finance authority and to comply with the prevailing Iraqi legislation in this regard”.
The financial departments in charge of branches activities should be inside Iraq at the location confirmed with Ministry of commerce – company registration department, and this includes having its bookkeeping, financial statements, vouchers and correspondences of the branch operations at the site of branch’s management registered with the ministry. Otherwise, the branch’s management shall borne the financial and legal consequences for not complying with the regulations.
It came to our attention that the General Commission for Taxes are working to issue relevant instruction to oblige all taxpayers, in specific foreign companies and its branched to comply with above announcement subject to rejection of financial statements and penalties in case of non-compliance.
- The general commission for taxes has stopped accepting checks for tax related payment ([payroll, corporate, and withholding taxes), and starting a new procedure in accepting bank transfer for these related payment, as they have also raised the amount for the bank transfer (ACH system) in respect of WHT payment from 1billion to become 5Billions Iraqi Dinars for each transfer.
- The general commission for taxes has stopped issuing all related withholding tax sub-receipts to the main contractor and announced a new process, which is the main contractor will prepare the sub-receipts on the back side of the main receipt and stamp all sub-receipts (with original stamp). Then the main contractor will hand over the sub-receipt to relevant subcontractor and the subcontractor will go to the tax commission to get his receipt stamped and signed by the tax commission.
- In respect of Social security department: a letter of resignation should be provided to the S.S department in case of removing an employee from the company’s S.S file.