Payroll & WPS in Iraq
Payroll in Iraq is regulated at two levels: what you pay and how you pay it. Employers withhold payroll tax monthly on a 3%–15% band structure and pay 12% employer social security (25% for oil and gas), while employees contribute 5%. Salary files are matched against labour and social-insurance records, so a payroll that balances internally can still fail if the file format or the contract data behind it is wrong. DocMakBooks produces Bank salary transfers with monthly payroll tax and social security schedules alongside the accounting entries.
How to set up payroll & wps in Iraq
- 1Load employee master data — contract type, basic pay, allowances, nationality and social-insurance status.
- 2Configure statutory deductions: employers withhold payroll tax monthly on a 3%–15% band structure and pay 12% employer social security (25% for oil and gas), while employees contribute 5%.
- 3Run the payroll, review the variance report against last month, then approve.
- 4Generate the salary file — Bank salary transfers with monthly payroll tax and social security schedules — and upload it through your bank.
- 5Post the payroll journal, accrue leave and end-of-service, and keep the payslips retrievable for the statutory period.
Payroll & WPS document requirements in Iraq
- Invoices must be in Arabic and denominated in IQD, with USD shown as a secondary currency where contracted
- Serial numbering and the commercial registration number are required
- Withholding on subcontractor payments must be evidenced on the invoice or payment certificate
Employers withhold payroll tax monthly on a 3%–15% band structure and pay 12% employer social security (25% for oil and gas), while employees contribute 5%. Salary files are produced as Bank salary transfers with monthly payroll tax and social security schedules, and payments reconcile against statements from Trade Bank of Iraq, Bank of Baghdad, Rafidain Bank, Byblos Bank Iraq.
Payroll & WPS mistakes that cost money in Iraq
- Paying salaries outside the protected wage channel, which exposes the licence to suspension in Iraq.
- Understating accrued end-of-service liability so the balance sheet flatters equity.
- Mismatches between the salary file and the registered contract value, which cause file rejection.
Penalties applied by General Commission of Taxes
- Up to 3x the underpaid tax for a materially incorrect return
- 5% of the tax due for each 21 days of delay, doubling after 21 further days
- Disallowance of costs recorded outside Arabic-language statutory books
Figures reflect the published position of General Commission of Taxes and should be confirmed on General Commission of Taxes offices and the Federal Board of Supreme Audit filings before you rely on them for a filing decision.
Payroll & WPS in Iraq: frequently asked questions
Does DocMakBooks generate salary files for Iraq?
Yes — Bank salary transfers with monthly payroll tax and social security schedules, ready to upload through Trade Bank of Iraq, Bank of Baghdad, Rafidain Bank and other local banks.
How are social contributions handled?
Employers withhold payroll tax monthly on a 3%–15% band structure and pay 12% employer social security (25% for oil and gas), while employees contribute 5%.