Iraq Capital Gains Tax Guide 2026

No Separate CGT Regime

Iraq is one of the few countries that does not operate a distinct capital gains tax system. Under Income Tax Law No. 113 of 1982, capital gains are classified as income and taxed at the same rates applicable to other income sources. For individuals, this means the progressive IIT rates of 3%, 5%, 10%, 12%, and 15%. For companies, the standard corporate rate of 15% applies (35% for oil and gas companies).

The absence of a separate CGT simplifies the tax system but offers none of the preferential treatment that some countries provide for capital gains, such as lower rates, exemptions, or deferral options.

Gains on Shares and Securities

Capital gains from the sale of shares in Iraqi companies, including shares listed on the Iraq Stock Exchange (ISX), are taxable as ordinary income. Key points:

• ISX shares: No special exemption or concessionary rate applies. Gains are fully taxable.
• Private company shares: Gains on sale of unlisted shares are also taxable as income.
• No securities transaction tax: The ISX does not levy a transaction tax on buying or selling shares, unlike some regional stock exchanges.

Taxpayers selling shares must report the gain as part of their annual income declaration. For infrequent or one-off transactions, the tax may be assessed at the time of transfer through a withholding mechanism.

Gains on Property

Gains from the sale of real estate are treated as ordinary income and taxed under the same IIT rates. The gain is calculated as the sale price minus the purchase price and allowable capital improvements. No indexation is available to adjust the cost base for inflation, which can result in a higher effective tax rate during periods of high inflation or rapid property appreciation.

There is no distinction between short-term and long-term property gains — the holding period is irrelevant for tax purposes. No primary residence exemption exists (see property tax guide).

Gains on Bonds and Debt Securities

Gains from the sale or redemption of bonds and other debt securities are also taxed as income. Government bonds are generally exempt from income tax, including any capital gain realised on maturity or sale. Corporate bonds and other private debt instruments are fully taxable. Interest income from bank deposits is subject to withholding tax (5–10%) rather than being included in the IIT computation in most cases (see investment income guide).

No Indexation, No ST/LT Distinction

Iraq's capital gains treatment is notably simple compared to many jurisdictions:

• No indexation: The cost base is not adjusted for inflation, regardless of how long the asset was held. In a high-inflation environment like Iraq, this can erode real returns.
• No ST/LT distinction: Gains on assets held for one month are taxed identically to gains on assets held for ten years. There is no reduced rate for long-term holdings.
• No annual exemption: There is no annual CGT allowance or exempt amount. All gains are taxable from the first dinar.

KRG — Separate Capital Gains Treatment

The Kurdistan Regional Government (KRG) treats capital gains similarly to federal Iraq — taxed as ordinary income. However, the KRG may apply different administrative procedures, including separate filing requirements and withholding rules for property and share transfers within KRG territory. Taxpayers should consult KRG tax authorities for region-specific guidance.

FAQs

Do I pay tax on cryptocurrency gains in Iraq?

Cryptocurrency is not specifically regulated under Iraqi tax law. In principle, gains from crypto trading would likely be treated as business or investment income and taxed under the IIT schedule. However, the GCT has not issued formal guidance on crypto taxation.

Can I offset capital losses against other income?

Capital losses may generally be offset against capital gains in the same tax year. Unused losses cannot be offset against other types of income (such as employment or rental income) and cannot be carried forward beyond five years.

Is there a withholding tax on share sales?

The ISX and transfer agents may be required to withhold tax from share sale proceeds for non-compliant or non-filing taxpayers. The withholding rate would correspond to the applicable IIT rate.

Disclaimer

This guide provides general information about Iraqi capital gains treatment for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Iraqi tax advisor or the General Commission for Taxes for advice specific to your situation. InvestmentKit does not provide tax advice.