Customs clearance is the procedure by which goods imported into Iraq are presented to the General Authority of Customs, the applicable duties and taxes assessed and discharged, and the goods released for use within Iraq. The procedure is governed by the Customs Law No. 23 of 1984 (as amended), supplemented by the Tariff Law No. 22 of 2010, the implementing regulations and decisions of the General Authority of Customs, and bilateral and multilateral arrangements to which Iraq is a party. The legal regime is administrative in character and engages prescribed procedures the observance of which is a precondition to the lawful release of imported goods.
Administrative Framework
The General Authority of Customs is the principal administrative authority for the implementation of the Customs Law. The Authority operates customs houses at the principal points of entry into Iraq, including international airports, seaports, and land border crossings. Within the Kurdistan Region, customs administration is conducted by the Kurdistan Regional Government customs authorities at the border crossings with Turkey, Iran, and Syria, with continuing engagement between the Federal Iraqi and Kurdistan Regional customs authorities on coordination matters. Importers should identify the customs house at which clearance will be conducted and the applicable procedures for that customs house.
Tariff Classification
Tariff classification is the determination of the tariff position applicable to the imported goods by reference to the tariff nomenclature adopted in the Tariff Law No. 22 of 2010. The Iraqi tariff is based on the Harmonised System of Tariff Nomenclature administered by the World Customs Organization, with national subdivisions for certain categories. The classification determines:
- The applicable customs duty rate
- Any sectoral measures applicable to the classification, including anti-dumping duties
- Any prohibition or restriction applicable to the classification
- Sectoral documentation requirements
Tariff classification disputes are among the most frequent customs disputes. The importer should structure its classification position with attention to the technical specifications of the goods, the General Rules of Interpretation of the Harmonised System, the explanatory notes of the World Customs Organization, and any binding tariff information available.
Customs Valuation
Customs valuation is the determination of the value of the imported goods for the purpose of the assessment of duties and taxes. The Iraqi framework adopts the principles of the WTO Customs Valuation Agreement, under which the transaction value is the principal basis of valuation, with hierarchical alternative methods available where the transaction value cannot be used. The principal elements include the price actually paid or payable for the goods, with adjustments for commissions, packing costs, royalties, and the costs of transport and insurance to the place of entry into Iraq. The importer is required to declare the customs value supported by the contractual and commercial documentation.
Customs Declaration
The customs declaration is the principal instrument by which the importer presents the goods and the related information to the customs authority. The declaration includes the description of the goods, the tariff classification, the customs value, the country of origin, the quantity, the supporting documentation, and the declaration of the importer’s identity. The declaration is, in general, presented through a licensed customs broker acting on the importer’s behalf, with the importer retaining ultimate responsibility for the accuracy of the declaration. False or misleading declarations engage penalty exposure under the Customs Law, including monetary penalties, seizure of the goods, and, in cases of intentional misconduct, criminal liability.
Customs Duties and Taxes
The principal duties and taxes engaged at importation are:
- Customs duty at the rates prescribed in the Tariff Law No. 22 of 2010 for the applicable tariff classification
- The reconstruction fee imposed under instruments adopted from time to time
- Sectoral fees and levies for particular categories of goods
- Stamp duties on customs documentation
- Sales tax on selected categories of goods
The duties and taxes are calculated on the customs value as adjusted, multiplied by the applicable rate. Payment is discharged in accordance with the procedures prescribed by the General Authority of Customs.
Inspection and Release
Imported goods are, in general, subject to inspection by the customs authority prior to release. The inspection may take the form of documentary review only, partial physical inspection, or full physical inspection, with the intensity of inspection calibrated to the risk profile of the consignment, the importer, and the category of goods. Where the inspection identifies discrepancies, the customs authority may issue a notice of discrepancy requiring the importer to address the matter through documentation, adjustment of declaration, or payment of additional duties. On the satisfactory completion of the inspection and the discharge of all duties and taxes, the goods are released to the importer.
Customs Bonds and Suspensive Regimes
The Customs Law provides for suspensive customs regimes under which goods may be imported into Iraq with the suspension of duties and taxes, subject to compliance with the conditions of the regime. The principal regimes include:
- Temporary admission, for goods imported for a limited period and intended for re-exportation
- Transit, for goods passing through Iraq to a destination beyond Iraq
- Customs warehousing, for goods held in approved warehouses pending clearance
- Inward processing, for goods imported for processing and subsequent re-exportation
- Free zone arrangements, in respect of goods within designated free zones under the Free Zones Law No. 3 of 1998
Each regime engages specific documentation, security, and supervisory requirements.
Customs Brokers
Customs clearance is conventionally conducted through a licensed customs broker acting on the importer’s behalf. The broker is licensed by the General Authority of Customs and is subject to the regulatory framework applicable to customs brokers. The contract between the importer and the broker should specify the scope of the broker’s authority, the broker’s obligations, the broker’s remuneration, and the allocation of risk between the parties for matters arising in the conduct of clearance. The importer retains primary responsibility for the accuracy of customs declarations notwithstanding the engagement of the broker.
Customs Disputes
Customs disputes arise where the importer disagrees with the customs authority’s position on classification, valuation, the entitlement to suspensive regimes, the assessment of penalties, or other matters within the customs framework. The procedure for the resolution of customs disputes engages an initial administrative review within the General Authority of Customs, with subsequent recourse to the administrative courts in accordance with the rules governing administrative litigation. The procedural requirements should be observed with care, including the time limits for the lodging of objections.
How We Can Help
Etihad Law Firm advises on customs clearance in Iraq, including the structuring of import declarations, tariff classification analysis, customs valuation positioning, the engagement of customs brokers, the use of suspensive customs regimes, response to customs inspections and discrepancy notices, and the conduct of customs disputes before the customs authorities and the administrative courts.