Erbil, Baghdad Agree on Key Points to Unify Customs Rules

ERBIL (Kurdistan24) - The Kurdistan Regional Government and Iraq's federal government have reached agreement on two of three key issues governing customs and border crossing procedures between Erbil and Baghdad, with a revenue-sharing formula now the subject of active negotiation, a legal adviser at the Kurdistan Region's Ministry of Interior said to Kurdistan24 on Sunday.

Sami Jalal, the legal adviser, told Kurdistan24 that the two sides had reached understanding on three foundational points during recent meetings between a Kurdistan Region delegation and Iraq's Economic Council, which focused on reorganizing border crossings and customs procedures.

Jalal said the first point of agreement involves forming a joint committee to review border crossings operating in the Kurdistan Region that had not previously been recognized by Baghdad. The committee's mandate will be to bring qualifying crossings into compliance with international standards and formally register them, while crossings deemed unnecessary would be closed.

On the second point, Jalal said the two governments will issue a joint annual customs exemption directory. Under the arrangement, any producer in the Kurdistan Region holding an exemption would be able to sell goods in Basra and other Iraqi provinces without additional customs barriers, and the same principle would apply in reverse. Traders importing goods through any entry point would pay customs duty only once, rather than facing repeated charges as goods move between the Kurdistan Region and the rest of Iraq.

The third and only outstanding point concerns how customs revenue collected at Kurdistan Region crossings will be distributed between Erbil and Baghdad. Jalal described the gap between the two sides as narrow.

"The point of disagreement is just one, and in my view it is not a major difference: on the issue of customs revenue collection, they initially asked for 100 percent of the revenue, but a proposal of 50-50 was later put forward. There are now two proposals on the table, and both sides are discussing them constructively," Jalal said.

Jalal said he expects Iraq's Council of Ministers to review and approve the overall project within this week or the next. He said implementation of the agreement would end the practice of traders being charged customs duty more than once, bring all crossings between the Kurdistan Region and Iraqi provinces under a single unified procedure, lower transportation costs, and support a broader revival of commercial activity across the country.

The talks build on a separate but related initiative already underway between Erbil and Baghdad: the rollout of the Automated System for Customs Data (ASYCUDA), an electronic customs platform developed under the United Nations. That system has reached an advanced implementation stage between the Kurdistan Region and the federal government and is likewise awaiting a final decision from Iraq's Council of Ministers before entering full operation.

Iraqi authorities have credited expanded electronic customs procedures, including ASYCUDA, with a sharp rise in federal customs revenue. Iraq collected more than 2.5 trillion Iraqi dinars in customs revenue during the first seven months of 2026, according to Samer Qasim al-Taie, director general of Iraq's General Customs Authority — a figure that already matched the country's total customs earnings for all of 2023. Revenue reached 500.6 billion dinars in July alone, a 150 percent increase over the same month the previous year. Al-Taie has projected that full-year customs revenue could exceed 3.5 trillion dinars by the end of 2026, which would mark a record for Iraq.

Taken together, the border crossing agreement described by Jalal and the ongoing ASYCUDA rollout point toward a more integrated customs framework between the Kurdistan Region and the federal government, with both processes now converging on the same next step: a decision by Iraq's Council of Ministers.