Transcript Customs
Wage Withholding Tax Re-introduction May 2004 Speaker : Mr Ihsan Shamran Dir. of Corporations Dept. • All income taxes (personal and corporate) were suspended from January 1st of year 2003 to April 30th of year 2004. • (Reference : Policy Orders issued by the CPA #37, #45 and #84) Employers • Private sector • Mixed sector • State-owned enterprises Employee definition • Any person who has performed or is performing work for a wage and works under the administration and direction of the party employing him. • Reference : Instructions No. 3 of 1983 Income subject to withholding tax • Salaries, wages • Allowances (subject to 30% rule for specific allowances) • Bonuses Principal exemptions • Allowances for – Clothing – food – lodging – transportation Not taxable if < 30% of the total wage of the employee • Other Allowances fully taxable Principal Exemptions (con’t) • Are exempted from tax : All income earned by foreign employees of foreign contractors and subcontractors of the CPA, Coalition Forces, forces of countries acting in coordination with the Coalition Forces’ governments that are providing assistance to Iraq. Principal Exemptions (con’t) • Are exempted from tax : All income earned by foreign employees of foreign contractors and subcontractors of foreign governments, international organizations and non governmental organizations registered pursuant to CPA Order #45, that are providing assistance to Iraq. Principal Exemptions (con’t) Are exempted from tax : • Salaries and allowances paid by United Nations from its own budget to its officials and employees. Preparation of Reports, Forms and Schedules • A: Employees Report • B: Forms Dhad.D\4A • C: Income Tax Deductions Schedule Must be filed and submitted to the Direct Deduction Section in the main office of the General Commission for Taxes (Baghdad) or to the branches of the General Commission for Taxes (hereinafter “GTC”). All forms, reports, schedules and correspondence sent to the GTC should be in the Arabic Language. Preparation of Reports, Forms and Schedules (con’t) A: Employees Report • List of name and job title of all employees • Salary or monthly wage for each of the employees • Hiring date • Serially numbered starting with #1 Limit date for submission : July 1, 2004 Report should be prepared for new hires, every three months. Preparation of Reports, Forms and Schedules (con’t) • A: Employees Report (con’t) For confidentiality and security reasons : Foreign companies may remit the employees report at the same time than Forms Dhad.D/4A (no later than March 31st 2005) to the head officer of Direct Deduction Section in Baghdad. Preparation of Reports, Forms and Schedules (con’t) B: Form Dhad.D\4A Page 1 : • 1) To be distributed among the employees. • 2) Employees complete page 1 and sign. • 3) Remit quickly to the employer • 4) Employer verify employees’ information If employer does not receive completed Form Dhad.D\4A from the employee, employee shall be entitled to only bachelor’s allowance for the year. رقم االستمارة : السنة المالية : وزارة المالية الهيئة العامة للضرائب 200 قسم االستقطاع المباشر استمارة (ض .د 4 /أ ) المختصة بالمكلفين الخاضعين لإلستقطاع المباشر ت أريخ الوالدة: . 1األسم الكامل للمستخدم : ية رقم هوية االح وال المدن : محل السكنى: ( . 2أ ) الحالة الزوج ية : / / * (الصفحةاألولى ) الجنسية : ب() ت أريخ الزواج : ( . 3أ ) ع نوان الوظيفة : (ب) أسم رب العمل : (ج ) محل السكني : التجاري : (د) رقم التسجيل . 4ب ين المعلومات التالية في الجدول ادن اه ب شأن أوالد ك (الذكور و االن اث) الذي ن هم دون الثامنة ع شرة من العمر والذي ن ت جاوزوا الثامنة عشرة وال يزالون في الدراسة الثان وية أو العليا مع ذكر أسم المدرسة أو الكلية التي هم فيها ومقدار ** : مدخ والتهم مبينا كذلك أعمارهم ح سب بطاقة األح وال المدن ية االسم الكامل لألوالد ( الذكور واإلن اث ) . 1 . 2 . 3 . 4 . 5 . 6 تأريخ الوالدة اليوم الشهر السنة مقدار دخ ل األوالد السنوي /ب الدن ان ير المالحظات االتوقيع : ااسم المكلف الكامل : االتاريخ : ال محاسب: رئيس الدائرة : ــــــــــــــــــــــــــــــــــــــــــ ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ ـــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ مالء هذه اإلستمارة في ب داية السنة المالية . * ي جب أن ت ** اذا كانت لديك بنت مكلف بإعالتها دون أن يكون لها زوج وليس لها دخل مستقل يزيد دون ذلك في حقل األوال د . على ( ) 200000دينار ّ ، مالحظات : المالية . لثالثة األولى من السنة التالية للسنة أ . -ي جب أن تصل هذه اإلستمارة إلى قسم األستقطاع المباشر خ الل األشهر ا 113لسنة 1982المعدل . ب .نلفت أنظاركم إلى أحكام المواد 59 ، 58 ، 57 ، 56من قان ون ضري بة الدخ ل رقم الفقرات ) 4 , 2ي حجب السماح من كل فقرة ( جـ .في ح الة ع دم ت دوي ن المعلومات كاملة ب أعدت في ن يسان2004 / Preparation of Reports, Forms and Schedules (con’t) B: Form Dhad.D\4A Page 2 • To be completed by employer and submitted to the GTC before March 31st of the following year. (Foreign companies may submit to the head officer of Direct Deduction Section in Baghdad) صفحة احتساب الضريبة تملئ من قبل المحاسب ( الصفحة الثانية ) دينار أ .المدخوالت (دينار ) 200 / /لغاية 200 / / الرواتب االسمية أو األجور الشهرية للمدة من مخصصات السكن أو بدل السكن المجاني مخصصات الطعام أو بدل وجبات الطعام المجانية مخصصات أخرى ( مع بيان نوعها ) مجموع المدخوالت ب .التنزيالت (دينار ) ) شهراً السماح القانوني لمدة ( إستقطاعات التقاعد أقساط التأمين على الحياة أقساط التأمين األخرى سماحات أخرى ( مع بيان نوعها ) . مجموع التنزيالت الدخل الخاضع للضريبة ( مجموع الفقرة أ ناقص ب ) توقيع رئيس الدائرة توقيع المحاسب Preparation of Reports, Forms and Schedules (con’t) C: Income Tax Deductions Schedule • To be completed by the employer at the end of every year in duplicate showing all the income, allowances and deductions, which are brought from page #2 of Form Dhad.D\4A • To be completed by employer and submitted to the GTC before March 31st of the following year. وزارة المالية الهيئة العامة للضرائب قسم االستقطاع المباشر أسم المستخدم ( بكسر الدال ) _______________: رقم التسجيل التجاري ___________________: جدول استقطاعات ضريبة الدخل للسنة المالية 2 1 أسم المستخدم و رقم رقم االستمارة هوية االحوال المدنية المجموع 3 المدخوالت 5 4 مخصصات مجموع الحقلين السكن و الطعام ( 3و) 4 200 9 8 7 6 السماح و المدخوالت الضريبة الضريبة التنزيالت الخاضعة المتحققة المستوفاة لضريبة الدخل () 6- 5 11 10 الضريبة الضريبة المتبقية الزائدة 12 فترة العمل من الى وزارة المالية الهيئة العامة للضرائب قسم االستقطاع المباشر ( بكسر الدال ) / االستقطاعات الضريبية من قبل المستخدم الوزارة ________________________ : المديرية العامة __________________ : ____________ أسم المستخدم (بكسر الدال ) إذا كان قطاع خاص _____________ : رقم التسجيل التجاري ________________________ : أقساط الضريبة دينار رقم الوصل رقم القسط / 200 تأريخه المجموع نؤيد صحة المعلومات المدونة في الجدول : توقيع المحاسب ………………………… . أسمه …………………………………. / / التأريخ توقيع رئيس الدائرة ………………….. أسمه ……………………………. / / التأريخ مالحظة هامة : يجب ت نظيم هذا الجدول وإرساله وفق التعليمات الصادرة ع ن الهيئة العامة للضرائب Method of deducting income tax and its payment dates • A special register should be kept wherein shall be entered salaries, allowances and wages of their employees who are subject to income tax. • Tax withheld shall be remitted to either the Direct Deduction Section at the GTC or the unit of Wage Withholding Assessment at the branches of the GTC. Method of deducting income tax and its payment dates (con’t) • Tax withheld may be paid in either cash or by certified checks, together with a list showing the names of the employees from whose income the tax was deducted, and the amount deducted from each of them, and the related period of the year. • Address in Baghdad: Jamal Abdlnasar Street, second building after Iraqi Museum. وزارة المالية الهيئة العامة للضرائب _____________: أسم المستخدم رقم التسجيل التجاري ق سم االستقط اع المب اشر ( بكسر الدال ____ _______________: م ن ال رواتب ل فترة الثالث اشهر است قطاع ات ضريب ة ال دخ ل المبالغ بالدينار ت اسم المستخدم رقم هوية االحوال الراتب الشهري االستقطاعات الشهرية م ج موع االست قطاع ات توقيع ال محا سب: : أسم ال مح ا سب ن سخة منه الى: (ي ذكر اسم المديرية ) \ القسم الم الي للضرائ ب . ) –لغرض التدقيق و المط اب قة نه اية السنة مع ق سم االستقط اع المب اشر قي الهيئة الع امة مجم استق 3أش Method of deducting income tax and its payment dates (con’t) • About the form shown on the previous slide, for confidentiality and security reasons, foreign companies may do the following: Keep the names of employees secret and use only the ID nationality number or the employee ID number. The withheld tax is to be paid in 4 installments as follows : • The amounts due for January, February and March = 1st day of April • The amounts due for April, May and June = 1st day of July • The amounts due for July, August and September = 1st day of October • The amounts due for October, November and December = 2nd day of January. Penalties and Interests • If the tax is not settled as indicated before on the fixed dates, an additional percentage of 5% shall be imposed after the lapse of 21 days from the fixed date. • An additional percentage of 10% shall be imposed if the amount is not paid within 21 days after the expiration of the first period. • Interest to be charged according to Resolution #307 of 1984. Penalties (con’t) • Other penalties may apply when the employer fails to carry out the duties imposed on him under the Income Tax Law #113 or the regulations issued there under, or refusing or delaying to submit to the Financial Authority any statement or information he was obliged or called upon to submit under the provisions of the Income Tax Law. Legal allowances • The income subject to income tax by direct deduction is reduced by the legal allowances granted to the resident individuals • Bachelor person ID 208,333 / month • Married employee ID 375,000 / month • Widow or divorcee ID 266,667 / month • State-Owned Enterprise employee (for 2004 only) ID 441,667 / month Legal allowances (con’t) • Additional allowances : For every child ID 16,667 / month If > 63 years old ID 25,000 / month No additional allowances for State-Owned Enterprises employees (ID 441,667 / month even if they have more than 4 children) So, no tax to withhold on income of a single employee working in the private sector if he earns less than ID 208,333 for a particular month. Tax Rates Rate 3% 5% 10% 15% Annual income (after allowances) Up to ID 250,000 Over ID 250,000 and up to ID 500,000 Over ID 500,000 and up to 1,000,000 Over ID 1,000,000 Tax rates (con’t) • The amount delineating the tax-bracket amounts above are divided by 12 months in order to determine the amount of tax to withhold for every month. Tax rates (con’t) Rate 3% 5% 10% 15% Monthly income (after montly allowances) Up to ID 20,833 Over ID 20,833 and up to ID 41,667 Over ID 41,667 and up to ID 83,333 Over ID 83,333 How to calculate the monthly tax amount to withhold : • Use of a work chart provided in the brochure • Use of withholding tables available at the office of the GTC Use of the work chart (brochure) • First step : – Calculate the monthly salary, monthly wages and monthly taxable allowances – Minus monthly deductions provided in Article 8 of the Income Tax Law #113 paid by the employee such as : Pension and contributions as determined by Pension and Social Security Laws (Private sector : 5% on gross wage) Use of the work chart (brochure) • Second step: • Subtract from the amount of the last slide the monthly legal allowance to which the employee is entitled: Bachelor person ID 208,333 / month Married employee ID 375,000 / month Widow or divorcee ID 266,667 / month State-Owned Enterprise employee (for 2004 only) ID 441,667 / month Use of the work chart (brochure) Second step (con’t) Additional monthly legal allowances : For every child ID 16,667 / month If > 63 years old ID 25,000 / month Use of the work chart (brochure) • If after the deduction of the monthly legal allowance which the employee is entitled, there is still a positive amount, that means there is income tax to withhold. • This monthly income tax to withhold can be determined by using the workchart provided in the last page of the brochure. جدول رقم ( ( )1المبالغ بالدنانير ) ( (Dد )(c ج ب)(A) (B أ 0 20833 41667 83333 5% 10% 15% 3% 625 1666 5833 ( )1الدخل :الحظ التعليمات ( )2اطرح الجزء 3من الجزء =2 ( )3ضرب الجزء 4في الجزء =5 ( )4اجمع الجزء 6مع الجزء 7 2 3 4 5 6 7 8 ()1 ()2 ()3 ()4 Use of Withholding tables • A second method is provided for the employers in order to determine the monthly income tax to withhold for each of their employees: • The employer can use Tax Tables called: – Tax Withholding Table – Single and Married – Tax Withholding Table – Widow or Divorcee Use of Withholding tables (con’t) • First step – Calculate the monthly salary, monthly wages and monthly taxable allowances – Minus monthly deductions provided in Article 8 of the Income Tax Law #113 paid by the employee such as : Pension and contributions as determined by Pension and Social Security Laws • Example = monthly salary of ID 703,000 Use of Withholding tables (con’t) • First step (con’t) Example : Single employee Monthly salary – Social security and pension contributions (private sector : 5%) Taxable income before Legal Allowance = = = ID 703,000 ID 35,150 ID 667,850 Use of Withholding tables (con’t) • Second step: Depending on the particular status of the employee, select one of the two tax tables which is applicable to the employee. Determine the code allowance which the employee is entitled for the month • For example, single employee = O Use of Withholding tables (con’t) • Third step: Under the column “Taxable income per month (before any applicable legal allowance)” of the selected Tax Table, you determine the taxable income per month bracket attributable to the employee. For this example ID 660,000 to ID 669,999 Use of Withholding tables (con’t) • Fourth step: The number in ID that corresponds in the applicable code allowance column is the amount of monthly income tax to withhold. For this example : ID 61,833 For More Information • See the “User’s guide for the wage withholding tax” and all other related documents at : • http://www.iraqcoalition.org/arabic/taxes/ • http://www.iraqcoalition.org/taxes/