Shafaq News

A recent 50% hike in customs fees on certain vehicles and goods has stirred widespread concern and debate in Iraq, as traders, economists, and officials question the timing, legal basis, and potential consequences of the decision.

Previously set at 15%, the updated tariff rate—now calculated at half the vehicle’s value—has prompted varied reactions. Observers say the new rates could boost revenues and protect domestic production, but importers warn of serious financial losses.

Clarifying The Distinction

Mohammed al-Jabari, a member of Iraq’s High Committee for Tax Reform, told Shafaq News there has been no increase in taxes on goods, noting that taxes can only be changed through parliamentary legislation. He clarified that while taxes require a law passed by Parliament, service fees such as customs duties can be amended directly by the relevant ministries or government agencies.

Al-Jabari explained that the government approved the new customs fees for vehicles with multiple objectives, including ensuring fairness between different types of imported goods. “Previously, a container of cars and another of consumer goods were charged equally, despite their differing values. The new pricing model adjusts for that discrepancy,” he said.

Adding that the customs rate on cars varies by type, and customs authorities deduct 30% of the factory value before calculating fees, as a concession to importers, He also noted that any importer who feels unfairly charged may submit an appeal to the Private Sector Development Center at the Ministry of Planning.

Economic Policy and Legal Foundation

Economic Expert Ikram Abdul Aziz told Shafaq News that the government’s move is part of a broader effort to support national industry and restructure the customs system in line with development goals.

She stated that the new customs framework, which took effect on June 1 under Cabinet Decision No. 270 of 2025, introduced revised pricing lists and aims to raise non-oil revenue. However, she emphasized that basic goods were excluded from the increased tariffs.

Calling the move “a significant step,” Abdul Aziz said the government is adopting a deliberate strategy while trying to account for social and economic implications. Despite the recent hike, she noted that taxes and fees currently account for only 2–3% of state revenue, calling for better governance to strengthen fiscal capacity.

Heavy Toll On Car Dealers

Meanwhile, vehicle importers and traders say they have been hit hard by the new pricing system.

Sarhan Matar, a car importer, told Shafaq News that the sudden jump in customs fees caused major financial losses for many in the trade. “The surprise decision disrupted the market. Cars priced at $30,000 are being appraised at $80,000, and duties are calculated on that inflated amount,” he vowed.

Sate’ al-Douri, another trader, added that rising customs costs have driven up vehicle prices at dealerships, hurting both importers and customers. “The government needs to revisit this decision quickly,” he urged.

Officials had earlier stated that basic goods are exempt from the new customs rates and defended the policy as a tool to reduce car imports and ease traffic congestion. The federal government also informed the Kurdistan Regional Government of the updated pricing lists.

Market Slowdown

In Baghdad’s Bayaa district, showroom owner Ahmed Alwan reported a slowdown in car sales. “Prices have gone up dramatically due to the customs hike, making car ownership harder,” he said. “I’ve stopped buying cars. I only display vehicles that private owners ask me to sell on their behalf.”

Alwan and other dealers have shifted to installment-based sales as a way to keep business moving.

Mustafa al-Jubouri, a showroom owner in the Saydiya district, said customs fees on a Dodge Challenger, for example, jumped from $30,000 to $60,000 “without any prior notice.”

Kareem Khalaf, a 32-year-old taxi driver, told Shafaq News he had planned to sell his current car to buy a new one, but the rising prices forced him to abandon the idea.

Written and edited by Shafaq News staff.