Iraq’s 20% telecom tax sparks debate over economic burden on citizens
Shafaq News- Baghdad
The decision by Iraq’s caretaker government, led by Mohammed Shia Al-Sudani, to reimpose a 20% tax on internet services and mobile recharge cards has sparked debate over the country’s fiscal policy and its direct impact on citizens.
The measure, which took effect on March 10, 2026, reinstates a tax previously abolished in 2022. However, it is now applied differently, with the levy added directly to the price paid by users rather than being imposed on telecom companies, as was the case under former Prime Minister Haider al-Abadi (2014–2018).
In 2016, Haidar Al-Abadi’s government defended salary deductions of 3.8% and telecom taxes as necessary during the costly war against ISIS and a sharp decline in oil prices. At the time, Iraq’s domestic debt stood at 63 trillion dinars ($52–53B in 2016 terms).
Recent economic data indicate that domestic debt rose to 91 trillion dinars in 2025–2026 (USD69 - 70 B), prompting the government to seek additional liquidity and focus on increasing non-oil revenues.
Economic experts interviewed by Shafaq News say the key difference between the two periods lies in how the tax is applied. Previously, companies could absorb part of the cost or adjust pricing structures. Now, the tax is passed directly to consumers, with an immediate effect on service prices.
Nawar Al-Saadi, a professor of international economics, described the shift as a “dangerous transformation” in tax policy. “In 2015, the tax targeted telecom companies as the legally responsible entities, allowing them some flexibility in managing the cost,” he told Shafaq News, adding that today, the burden has moved entirely to the consumer, meaning the impact is immediately reflected in the price of recharge cards or internet subscriptions.
He noted that this approach eliminates room for competition among providers to absorb costs, explaining, “Users now pay the full 20% when purchasing mobile credit or renewing fiber-to-the-home (FTTH) subscriptions.” Saadi stressed that telecommunications and internet services have become essential to economic activity, education, and work, making any increase in their cost significant for a broad segment of the population.
Economic researcher Ahmed Eid said the decision reflects a government push to boost non-oil revenues but raises concerns about how the tax burden is distributed.
Speaking to Shafaq News, he said, instead of addressing inefficiencies in public revenue management or collecting outstanding dues from major companies accused of failing to meet past financial obligations, “the government has turned to taxing everyday services used by citizens because it is the easiest option.”
Eid pointed out that many countries are reducing taxes on digital services to support technological transformation, “while Iraq is moving in the opposite direction.” He also argued that imposing a tax of this scale on services relied upon by millions for work and education highlights a misalignment in fiscal priorities and deepens perceptions of inequality.
