US military contractors accuse Iraqi government of imposing, levying inflated fees

US Defense Department contractors operating in Iraq are accusing Baghdad of making them pay higher taxes and threaten to stop production if they don’t adhere to their demands.

ERBIL, Kurdistan Region (Kurdistan 24) – US Defense Department contractors operating in Iraq are accusing Baghdad of making them pay higher taxes and threaten to stop production if they don’t adhere to their demands.

The Iraqi Government is forcing payments of the inflated fees by threatening to halt the delivery of essential supplies, including food, fuel, and water bound for US and coalition forces, the Associated Press reported.

Iraqi government officials have reportedly refused to issue, or have delayed, the delivery of work visas to employees of companies who do not pay the taxes, the report alleged.

A senior executive at a US company which supports American troops in Iraq spoke to AP on condition of anonymity and said contractor vehicles are subject to scrutiny at checkpoints where they are frequently stopped and ordered to hand over documents proving they have paid taxes.

Military contractors have warned the Donald Trump administration that the extortion-like tactics are hindering the ongoing battle against the Islamic State (IS).

According to the executive, Iraqi officials calculate the amount levied by “determining the total value of the contract and then charging 20 percent of what they estimate the company’s gross revenue would be.”

These estimates are often inaccurate and can reach a potential total of USD 20 million.

Meanwhile, Najiha Abbas Habib, the director general of Iraq’s tax authority, denied the allegations and said some foreign companies, including from the US, are not subject to taxation.

“Many foreign companies operate in Iraq without paying any taxes at all,” she told AP.

Despite allegations that the tax hikes have negatively impacted the campaign against IS, the spokesperson for the US Embassy in Baghdad denied the claims.

“Iraqi enforcement of tax laws has not disrupted US efforts to defeat [IS],” spokesperson Robert Mearkle told AP in an emailed statement.

On the other hand, a trade group representing several contractors said the way the Iraqi government was collecting taxes “heightens the potential for fraud and waste.”

Among the companies operating in Iraq with American military contracts are General Dynamics Land Systems and DynCorp International.

Both companies denied commenting on whether they had paid taxes to the Iraqi government.

 

Editing by G.H. Renaud