If you are planning to launch your online store, it is important to be aware How to calculate sales taxes Online store in Iraq(2023) In addition, this requires knowledge of local tax legislation and regulations. As tax laws vary according to the geographical region and the type of goods sold, we provide you with all the details in the following article.
Are your online store sales in Iraq subject to the tax system?
All joint stock or limited companies established under Iraqi laws, or under other international laws and whose management is located in Iraq, are subject to for income tax on Online stores. The tax is also imposed on the income of Iraqi individuals residing, whether inside or outside Iraq, regardless of where the income is received.
As for foreign companies registered in Iraq, or that own a store Permanent in Iraq, it is imposed Tax On its income generated in Iraq only.
The tax rate applied to companies variesOnline stores in Iraq Between 15% for domestic and foreign domestic companies, based on their annual gross income.
In addition to the sales tax, which is estimated at 10% and is imposed on the companies mentioned previously in the article.
See also Steps to design and create a free online store in Iraq
How to calculate sales taxes on online store products in Iraq
In Iraq, a tax is imposed on the profits made For companies andOnline stores During the tax period by 15%. The General Tax Authority has set the range of profits allocated to tax at a rate ranging from 10-14% for the year 2008, depending on the type of activity practiced by the companies.
The annual income tax is calculated as follows:
- Ratio 3% for works valued at 250,000 dinars.
- 5% ratio from 250,000 – 500,000 dinars.
- 10% ratio from 500,000 - 1,000,000 dinars.
- The percentage of 15% is more than one million dinars.
Where it should Online stores Those in Iraq or those who have a permanent establishment in the country pay tax on profits made in Iraq only, regardless of the location of receipt of the profits. It is necessary to adhere to the necessary tax procedures and cooperate with the General Tax Authority to avoid any violations that may lead to the imposition of penalties and fines.
The importance of calculating sales taxes on online store products in Iraq
1. The tax system is considered one of the main mechanisms for financing the state treasury and supporting economic development processes.
2. Using the tax system to stimulate investments and direct them towards vital sectors of the economy, including the electronic economy.
3. The tax system can play a role in controlling economic phenomena affecting society, such as recession and inflation, by adjusting prices, taxes, and fees imposed.
4. To improve the distribution of wealth and income in society.
Read also: 10 ideas for starting a free online store in Egypt.
How can I legally reduce taxes on my online store in Iraq?
According to the Iraqi authority responsible for taxes, there are many goods and commercial activities that are exempt from annual income tax and sales tax, including agricultural products (plant and animal), industrial products, and other goods and facilities.
Local and foreign companies registered in Iraq can also use some legally approved tax exceptions, such as deducting payable costs and depreciation, and liquidating losses that can be carried for the subsequent five years, according to the tax regulations in force in Iraq.
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Article sources:
2Income tax exemptions for companies and institutions
3Mechanism for calculating income tax
