Iraq’s economy is still recovering from the effects of war and, consequently, the banking infrastructure is poorly developed. Services such as internet banking, ATMs and credit card facilities are rare, which has resulted in a cash-based economy. Expats might initially find the system difficult to deal with, but most expat employers provide support for navigating Iraq's financial landscape.
Money in Iraq
The Iraqi dinar (IQD) is the official currency in Iraq. It is subdivided into 1,000 fils, although inflation has rendered fils obsolete.
Notes: 50 IQD, 250 IQD, 500 IQD 1,000 IQD, 5,000 IQD, 10,000 IQD, and 25,000 IQD
Coins: 25 IQD, 50 IQD and 100 IQD
Banking in Iraq
Iraq’s banking system is underdeveloped and may not meet the standards that most expats are accustomed to. Despite this, there are signs of improvement.
As part of attempts at national economic rehabilitation and development, the Iraqi government has worked to encourage the presence of international banks in the country. A number of international banks have obtained licences to open branches in Iraq, while others have formed partnerships with Iraqi banks.
Iraq is mostly a cash-based society. Although large vendors have traditionally accepted US dollars and euros, they are increasingly only accepting the Iraqi dinar. Credit and debit cards are rarely accepted anywhere except at facilities found in expat housing compounds.
Due both to the challenge of opening an Iraqi bank account and the short-term nature of most expat contracts in Iraq, most employers pay their employees' salaries into their foreign bank accounts.
Taxes in Iraq
Taxable income in Iraq exists on a progressive tax scale ranging from 3 to 15 percent. Employers generally handle taxes for expats working in Iraq. Most expat contracts in Iraq operate under a PAYE (pay-as-you-earn) system, which means that expats generally receive their net wage with their income tax automatically deducted.
Additional home-country tax obligations may apply, so it's always best for expats to hire a tax practitioner that specialises in expat tax matters to ensure they remain on the right side of the law.