Channel8 has learned the draft recommendation finalized by the Iraqi State Council regarding non-oil revenues between the Kurdistan Regional Government (KRG) and the federal government after three lengthy meetings has been signed by 24 members of the Council.

The report is expected to be submitted to the Council of Ministers soon and put to a vote by Prime Minister Mohammed Shia al-Sudani for a final decision.

A key point in the report states that 100% of customs revenues from the Kurdistan Region’s border points should be handed over to the Iraqi Ministry of Finance. The KRG had previously requested a 50% distribution of the revenue, but the State Council rejected the proposal.

Regarding Taxes and Fees
The State Council proposed that 50% of taxes and fees collected under Iraqi federal law be allocated to the Kurdistan Region, with the remaining 50% returned to the central government. The KRG had previously demanded that all such revenues remain within the region.

Another point in the report is that any revenue and taxes collected under the laws of the Kurdistan Region would remain entirely with the KRG, with none returned to Baghdad. This includes revenues from municipalities and businesses, such as taxes on barber shops and other small establishments, which the Iraqi finance minister had previously requested be split 50-50.

Deduction (Maqasa) to Address Financial Transfers

To address the Kurdistan Region's concerns about sending money to Baghdad and waiting for its return, the State Council proposed a deduction mechanism. For example, if the Kurdistan Region had to send 100 billion dinars in customs revenue to Baghdad while Baghdad owed 400 billion dinars to supplement salaries, the Iraqi Ministry of Finance would directly deduct the 100 billion dinars from the region’s share, sending only 300 billion dinars.

This ensures both parties meet their obligations without delays caused by transferring and returning funds.

Dependence on Oil Agreement

Senior Iraqi government sources indicate that if an oil agreement is reached between Erbil, Baghdad, and the oil companies, the issue of non-oil revenues would be easily resolved. If either party disagrees with the recommendations, alternative mechanisms have been considered.

Positive Attitude from Prime Minister Sudani

Iraqi Prime Minister Mohammed Shia al-Sudani is reportedly supportive and aims to resolve the issues fundamentally, signing a final agreement between the two sides.

At the time the report was prepared, the State Council requested that the Kurdistan Region send two representatives as observers, but no representatives were sent.