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Where Taxpayers and Advisers Meet

Foreign earnings tax Iraq

huesey1974
Posts:1
Joined:Fri Nov 12, 2021 4:18 pm
Foreign earnings tax Iraq

Postby huesey1974 » Fri Nov 12, 2021 4:43 pm

Hi,
i have been looking around but can find an exact answer. i have been offered a job in Iraq, its 28 days on 28 days off. I am a little confused on how i pay tax. if i only live in the UK for 90 days i believe it to be tax free. If i go over the 90 days would i pay tax at the usual UK rates? Personal Allowance Up to £12,570 0% Basic rate £12,571 to £50,270 20% Higher rate £50,271 to £150,000 40%? Any help greatly appreciated.
Thanks

iwmtaxadvisor
Posts:45
Joined:Wed Sep 09, 2020 5:12 pm
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Re: Foreign earnings tax Iraq

Postby iwmtaxadvisor » Sat Nov 13, 2021 2:22 pm

Cross border tax research is frustrating. Information is bitty and sparse, and you have to slowly put it together. It takes time to get to know all the traps and there are so many that it is truly difficult to find some time-saving shortcut.
[b]The basics[/b] The UK taxes income and gains on the basis of residency. The UK taxes income which is sourced from an employer 'in' the UK performed 'in' the UK - but the rules change for employers not in the UK and employments with no duties in the UK. iraq seems to tax income in the same general way. The UK defines residency one way, Iraq defines it another.
[b]The choices[/b] Tax planning - I mean, planning to reduce tax - is all about listing the alternatives and analysing the likely outcomes. The choices seem to be (a) tax it all in the UK (b) tax it all in iraq (c) attempt to have no country tax it (d) have it taxed in some offshore location with a low local income tax rate
[b]The analyses[/b] A tax planner requires detail to do this. But you and I could say that 28 days in iraq and 28 says back in the UK would usually result in the UK saying you would be resident, especially if you had a number of other UK ties. On the other hand Iraq might say the same and there's no Double Tax Treaty so you'd pay the higher rate of tax from both countries. Now if you were to spend your 28 days off in some other country, then at some point (and you say no more than 90 UK days but that needs confirming) the UK would say you are not UK resident and not seek to tax you. I did have a friend some years ago spend no more than 3 months in Guernsey, Switzerland, Thailand and where-ever and no country taxed him - but that was a decade ago and he was tax qualified so he could watch out for changes.
[b]Does one need an adviser[/b] I think you do, yes. It's complicated. You need some input on Iraq's tax practice as well. On the basis of 100k salary the difference to you if you get it wrong is at least 20k p.a.
[b]Next step[/b] ask your HR team for free advice with the company's tax accountants. If that does not work, then any CTA will say if they are qualified or not to advise and if not will possibly have a referral to give you. Or talk to us.
Robert Warren
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