Dr. Ibrahim Adeeb Al-Jalabi: Assistant Professor in Economic Development / College of Administration and Economics / University of Mosul.
The rates at which individuals enter the field of entrepreneurship are negatively affected by administrative burdens and bureaucratic complexities, in addition to tax-related regulations and the complexities of the corporate income tax system.
Iraq’s tax policy remains influenced by socialist thought, as the tax laws in force are primarily derived from the Income Tax Law No. 113 of 1982 and its amendments. This law is the sole basis for calculating both individual and corporate taxes and lacks clear details regarding startups or entrepreneurial projects.
The tax law grants tax exemptions limited to very specific activities related to certain agricultural projects or projects providing services to the state, such as the transportation of petroleum products. Other activities, such as commercial or professional businesses, are considered by the tax law as the most important forms of income sources.
Certain taxes increase investment costs, such as the tax imposed on rentals, which is 10% of the property rental value according to the amended Property Tax Law No. 162 of 1959, raising the rental levels paid by startup owners.
The government needs to reduce the direct financial costs borne by private, especially entrepreneurial, projects by preparing a regulatory list aimed at promoting entrepreneurial projects.
Exempting company profits from income tax for suitable periods to reduce the capital recovery period and increase the necessary resources for the project to meet its establishment requirements.
Exempting assets purchased by private projects from ownership transfer fees if located within specified areas.
Exempting private sector employees from income tax for a specified period or reducing it.
Enacting laws requiring private sector institutions to contract with national companies for obtaining goods and services needed in their operations, especially those that cannot be produced locally.
Introduction:
Iraq has suffered and continues to suffer from the remnants of the socialist system that dominated its economic life since the 1950s. This system, pursued for half a century, implemented policies that severely damaged private enterprises and weakened economic incentives for private investment. With the continuation of the socialist approach, the culture of private work dwindled, and the general tendency among the majority of society became to seek employment in the public sector, making Iraq today the country with the highest rate of public sector employment.
