A woman walks past street art in Baghdad's Al Anbari neighbourhood. Iraq's government says its citizens deserve a secure living environment, essential services and a break from conflict. AFP
A woman walks past street art in Baghdad's Al Anbari neighbourhood. Iraq's government says its citizens deserve a secure living environment, essential services and a break from conflict. AFP
A woman walks past street art in Baghdad's Al Anbari neighbourhood. Iraq's government says its citizens deserve a secure living environment, essential services and a break from conflict. AFP
A woman walks past street art in Baghdad's Al Anbari neighbourhood. Iraq's government says its citizens deserve a secure living environment, essential services and a break from conflict. AFP


Iraq doesn’t want to be an arena for settling scores


Farhad Alaaldin
Farhad Alaaldin
  • English
  • Arabic

February 08, 2024

Having collectively defeated ISIS's so-called caliphate and minimised the risk of its return, Iraq and its anti-ISIS coalition partners are now actively engaged in discussions on how to transition into a new, long-term and mutually rewarding relationship. However, it is no secret that there is a degree of ambiguity on what each side expects from the other and uncertainty as to why Iraq is pushing for a relatively short and rapid transition.

Iraq has shown, and continues to show, deep appreciation and gratitude to those regional and international partners who helped the country survive the ISIS invasion, rebuild its military capacity and begin its recovery. The role of the international coalition was undeniable and repeatedly acknowledged by successive Iraqi governments.

However, the current government believes that the threat posed by ISIS is no longer an existential one, and the security forces are in a strong position to defend the country against terrorism. Indeed, the armed forces are currently considered to be the most experienced and knowledgeable in tackling terrorism, fighting extremists on every battleground, rural and urban. The military's track record and achievements are impressive, displaying unparalleled bravery and courage.

A US officer trains Iraqi policemen at a Mosul firing range on February 17 last year. Iraq's current government believes its security forces are now in a strong position to defend the country against terrorism. Courtesy: US Army
A US officer trains Iraqi policemen at a Mosul firing range on February 17 last year. Iraq's current government believes its security forces are now in a strong position to defend the country against terrorism. Courtesy: US Army

Consequently, Baghdad believes that the next phase of fighting ISIS in Iraq does not require a broad international coalition. Instead, Iraq is moving towards bilateral relations and co-operation with coalition nations to secure what the country and its security forces need. This was the state of mind within the government even before regional security dynamics became complicated as a result of the war in Gaza.

Over the past 40-odd years, Iraq has lived through a series of devastating conflicts, the first of which was the Iran-Iraq war, followed by the Gulf War, the overthrow of Saddam Hussein’s regime, and the war against ISIS. These wars left devastation, tragedies and troubles in their wake, reducing Iraq from being among the region's strongest countries to one of its weakest. Its financial wealth dissipated, and its infrastructure and military, as well as its industrial and agricultural capabilities, collapsed until poverty affected more than a quarter of its population. Other problems arose, including rampant unemployment, the collapse of the education, health and essential services sectors, and most importantly, the human losses of young people, children and women in alarming numbers.

Not surprisingly, therefore, Iraq seeks to distance itself from wars imposed on it by others and that threaten its stability. Instead, the government of Prime Minister Mohammed Shia Al Sudani is keen to focus on caring for its citizens who deserve a safe and secure living environment, a break from conflict and the provision of essential services. Iraq has, for the first time, adopted an ambitious service and investment-orientated programme, reflected in the substantial three-year budget that it has secured. It is time for the country to unleash its human and natural resources to build a promising future for its people.

Protecting Iraq from being engulfed in an all-out war requires vision and action on more than one level and in more than one direction.

Iraq considers both Iran and the US to be its strategic partners, and refuses to take sides in their ongoing rivalry

Iraq has a clear vision for future relations with its security partners and members of the international coalition against ISIS. In his meeting with Nato Secretary General Jens Stoltenberg in Davos last month, Mr Al Sudani stated: “Iraq does not mind co-operating with the countries of the international coalition in the field of armament, training and equipment, within the framework of bilateral relations between Iraq and the countries of this coalition.”

Iraq wants to stand at arm’s length from all sides in any regional conflict. It doesn’t want to be the backyard of any conflict nor an arena for settling scores. For example, it considers both Iran and the US to be its strategic partners, and refuses to take sides in their ongoing rivalry. Iran needs an air and land corridor to reach Syria, while the US needs to use Iraqi territory to support the presence of its forces in Syria. However, each can find alternative ways to serve their regional interests without involving Iraq.

Geopolitically, Iraq is uniquely positioned to play an active and constructive role in the Middle East, and must be supported if it is to realise its potential. It is an important country in the international energy market; it has a strategic location in the Middle East and is the only Arab nation with distinguished relations with all of its neighbours as well as the top-tier countries in the eastern and western poles. It also plays a pivotal role in the fight against terrorism.

Iraq will continue to seek to develop better relations with regional countries and the international community based on shared interests, mainly on mutually rewarding strategic economic projects. These include joint investment in interconnectivity as well as rebuilding the country’s infrastructure.

Its stability and prosperity remain vital to the region. It is in the interest of both Iraq and its international partners to remain sensitive to the complexity of the security dynamics in the Middle East and how these are likely to delay progress and be detrimental to the country’s ultimate recovery.

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1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

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3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

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Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Updated: February 08, 2024, 4:00 AM