The Kurdistan Regional Government (KRG) has introduced changes to the method used to assess customs duties and taxes on hybrid and electric vehicles, ending the practice of valuing imported vehicles below their market prices.

According to a directive issued by the KRG Directorate General of Customs, the actual market value of hybrid and electric vehicles will now be used when calculating applicable taxes and fees.

Market Value to Be Used for Tax Assessment

An official document dated June 10, 2026, and signed by the Director General of Customs, Kamal Rauf, suspended the use of previous valuation methods that allowed certain vehicles to be assessed below their market value.

Customs officials stated that under the previous system, a vehicle with a market value of $30,000 could be assessed at a significantly lower value, such as $12,000, for tax purposes. However, since June 15, 2026, customs authorities have begun applying the actual market value of imported hybrid and electric vehicles.

Current Tax Structure

Hybrid and electric vehicles currently remain exempt from customs duties in the Kurdistan Region. Importers are only required to pay internal revenue tax, which is calculated at a rate of 2.25% for every $10,000 of the vehicle’s assessed value.

Under the current system, a vehicle valued at $20,000 would incur an internal tax of approximately $450.

ASYCUDA Implementation to Introduce New Duties

The Directorate General of Customs stated that further changes are expected following the full implementation of the Automated System for Customs Data (ASYCUDA) across the Kurdistan Region.

Once the system becomes fully operational, the existing customs duty exemption for hybrid and electric vehicles will be removed. At that stage, both customs duties and internal taxes will be imposed on imported vehicles.

According to customs authorities, the combined customs and tax rate is expected to reach 17.25%. Under that framework, a vehicle valued at $10,000 would be subject to approximately $1,725 in total customs duties and taxes.

Policy Shift

The revised valuation mechanism is intended to align customs assessments more closely with actual market prices and improve the accuracy of tax collection. The changes come as the Kurdistan Region continues efforts to modernize customs procedures and implement digital customs systems through ASYCUDA.

Officials have not yet announced a timeline for the full implementation of the new customs system or the removal of the current duty exemptions for hybrid and electric vehicles.