Channel8 has learned that, under a new decision by the Iraqi government, companies in the Kurdistan Region are now required to obtain federal approval for their final financial audit reports to conduct foreign remittances and money transfers.

According to information obtained by Channel8 from an informed source, this directive took effect on June 1 of this year, and companies are now prohibited from executing transfers unless their reports receive formal clearance in Baghdad.

Baghdad’s Decisions Force Companies into Double Taxation Risk

This issue arises specifically when Kurdistan Region companies initiate foreign remittances through banks. Corporate financial reports must now be submitted to banks for auditing whenever a remittance is requested. 

This decision creates a severe administrative hurdle, as companies must prepare and submit these final financial audit reports on both a quarterly and annual basis, exposing them to the risk of paying taxes twice—once to the Kurdistan Region and once to Iraq. 

The directive also runs parallel to the implementation of the ASYCUDA customs system at the Kurdistan Region's border crossings, further complicating regional trade logistics.

New Directive Shifts Corporate Audit Oversight

Under the new regulations, corporate financial reports must be approved exclusively by an Iraqi statutory auditor and the federal Board of Supreme Audit. This means that approvals from Kurdistan Region statutory auditors will no longer be accepted by banking institutions. 

Consequently, Kurdistan Region companies are being effectively forced to register themselves in Baghdad to secure the necessary financial approvals.

Erbil-Baghdad Talks Scheduled Over ASYCUDA and Financial Rules

To address this matter, a Kurdistan Regional Government (KRG) delegation is scheduled to visit Baghdad in the coming days. 

The delegation aims to negotiate a resolution with federal officials regarding ASYCUDA implementation, outstanding corporate financial regulations, and other unresolved border issues.