The Mystery of Kurdistan’s Border Taxes

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Missing Millions? The Mystery of Iraqi Kurdistan’s Border Taxes

Money collected at Iraqi Kurdistan’s borders with Iran and Turkey should amount to hundreds of millions of dollars for the cash-strapped region. Yet nobody knows where all the cash is going. Critics say politicians are collecting it and an investigation is underway.

Revenues collected at the borders of Iraqi Kurdistan have been a major source of income for the the semi-autonomous, northern region in the past. And with the current financial squeeze inside the region, thanks to, firstly disputes over oil revenues and the federal budget with Baghdad, and secondly, Baghdad’s own economic problems, there’s been more emphasis on these revenues recently. After all, they might have some potential to help relieve Iraqi Kurdistan’s current financial crisis.

The problem is, although the revenues are clearly being collected at the borders between the region and neighbouring Iran and Turkey, nobody knows where they are going to.

As one senior Iraqi Kurdish official admitted around three weeks ago: “What happens to the revenues collected at the region’s borders is a mystery”.

On March 12, Iraqi Kurdistan’s Minister of Finance and Economy, Rebaz Mohammad Hamalan, expressed concern about the fact that although a large number of trucks and tankers cross the borders into Iraqi Kurdistan daily, the amount of revenue the government collects from this seems minimal.

The money collected at the borders is mostly in the form of customs and duties and a lot of it comes from land transport, like the trucks. Even out-of-date figures suggest there should be a lot of money collected at borders.

For example, one 2003 book, titled Iraqi Kurdistan: Political Development and Emergent Democracy, noted that 50 trucks per day carrying cigarettes were coming through the border at just one of the region’s major crossings – each truck was taxed US$17,500. And that was in 1999.

Another book on the region – Kurdish Quasi-State: Development and Dependency In Post-Gulf War Iraq – wrote that in 2002, revenues at the Turkish border totalled around US$750 million but, the author says, a lot of this went to politicians.

Further estimates can be found in US Embassy cables from 2007 where, based on a duty tax of 5 percent on all goods entering the country and Turkish export figures, the diplomats who wrote the cable thought that Turkish border revenues should be closer to US$100 million – and that’s from just one border crossing.

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