2026-02-07T14:48:35+00:00
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Shafaq News
In early 2026, Iraq started
enforcing sweeping changes to its customs and import regime under Cabinet
Decision No. 957, approved in late October 2025. The move revised tariff
schedules, altered collection procedures, and accelerated the shift toward electronic
customs clearance, sparking reactions from lawmakers, traders, and market
actors.
The controversy is centered on
whether the cabinet merely enforced existing tariff laws through new
administrative mechanisms, or whether it effectively imposed new taxes without
parliamentary approval.
What Cabinet Decision No. 957
Changes
Cabinet Decision No. 957 applies
revised customs tariff rates ranging from 0.5% to 30% across multiple brackets.
The measures cover the full national customs tariff schedule, which includes 99
chapters and approximately 16,400 tariff items used in international trade.
The government said the decision
applies to all border crossings and customs centers and will remain in force
unless the cabinet issues an amendment or suspension.
The tariff structure itself is based
on the Customs Tariff Law No. 22 of 2010 and its subsequent amendments, which
classify goods by category and assign rates accordingly. Essential food items
are generally subject to tariffs of 0.5% to 5%, while industrial raw materials
face rates of about 0.5% to 2% to support domestic production. Electrical
appliances and household goods typically fall between 10% and 15%, luxury items
between 20% and 30%, and vehicles are taxed according to engine size and year
of manufacture, usually between 8% and 15%. Tobacco and alcohol are subject to
significantly higher duties.
All imports are classified under the
International Harmonized System (HS Code), which determines the applicable
tariff rate for each product.
Automation and Customs Reform
The enforcement of Decision No. 957
is closely tied to a broader customs reform program launched in 2024–2025. The
government has sought to modernize customs administration, unify procedures
between the federal authorities and the Kurdistan Region, and reduce
paper-based transactions.
A central pillar of this effort is
the rollout of the ASYCUDA electronic customs system, a United
Nations–supervised platform that automates customs declarations, enforces
electronic payment of duties, and limits discretionary practices at border
crossings.
Under the new framework, traders are
required to submit declarations electronically and settle customs duties
through the banking system. Authorities argue that this ensures uniform
application of tariff rules and guarantees that revenues are transferred
directly to the state treasury.
Government Position: No New Taxes
The government and the General
Customs Authority reject claims that the decision introduces new taxes, as the
tariffs themselves are already established under existing law, and that the
current measures simply enforce those rates through automated procedures.
Read more: Delayed reform or fiscal shock? Iraq’s tax measures test state capacity
They describe the collected amounts
as “tax deposits” that will later be reconciled electronically and attribute
public confusion to misinformation and the circulation of outdated videos that
do not reflect the current customs system.
Legal Objections And Parliamentary
Challenge
Opponents of the decision, including
several lawmakers and trade groups, present a different legal interpretation.
Members of parliament have begun gathering signatures to cancel what they
describe as an unlawful cabinet decision issued by a caretaker government. They
cite Article 28 of the Iraqi constitution, which stipulates that taxes and fees
may not be imposed, amended, or collected except by law. Critics also refer to
Article 1 (Third) of the Customs Tariff Law No. 22 of 2010, which treats
customs duties as an integral part of the law and restricts the cabinet’s
authority to temporary adjustments only in cases of economic necessity or
protective measures.
From this perspective, altering
tariff rates through an administrative decision exceeds the cabinet’s mandate
and could be challenged in parliament or before the courts.
Market Reaction And Economic Impact
The dispute quickly spilled into the
market. In the initial phase of enforcement, some traders continued importing
goods but left shipments stockpiled at ports and border crossings, delaying
their entry into the domestic market to avoid compliance with the revised
procedures.
The resulting supply disruptions
contributed to price increases, market volatility, and pressure on the exchange
rate. When these tactics failed to produce a policy reversal, traders organized
protests in several provinces, including Baghdad and Duhok, and signaled
further escalation through the possibility of coordinated shop closures
scheduled for February 08.
Now What?
For now, Cabinet Decision No. 957
remains in effect nationwide. Any change would require a new cabinet decision,
parliamentary legislation, or a successful legal challenge. Until then, Iraq’s
customs system is operating under a framework that blends long-standing tariff
laws with newly enforced electronic controls, leaving the final legal outcome
unresolved.
