L. Paul Bremer, Coalition Provisional Authority

“ These higher allowances will effectively exempt many public and mixed sector workers from taxation,
and with fewer such workers to tax initially, the capacity of the tax collection system can be properly
developed over time. Beginning January 1, 2005, however, public, mixed, and private sector workers
will be subject to taxation at the same rates.
Example:
Financial year 2004. Assume a public sector employee with a wife and two children is paid
wages of ID 430,000 by the public sector employer during each month of financial year 2004. ”

“ Paragraph (5) of Article 7 of the Income Tax Law No. 113 of 1982 is deleted.
CPA/ORD/19 February 2004/49
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2. To ensure that the Ministry of Finance has sufficient capability to accurately and
comprehensively assess and collect taxes on both public and private sector employees
in a transparent manner:
a) For financial year 2004, employees of the government offices, public and
mixed sectors shall be entitled to an allowance of ID 5,300,000 for
themselves, spouse, and children collectively under Item (1) of Article 12 of
the Income Tax Law No. 113 of 1982. ”

“ Declining Balance: Company C uses the declining balance method of depreciation. At the
end of 2002, the balance of Group 3 property was 10 million dinars. No purchases or sales
were made in 2003 or during the first three months of 2004. Company C can claim a
depreciation deduction beginning April 1, 2004 for Group 3 property equal to 15 percent
CPA/ORD/19 February 2004/49
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(the yearly full rate is 20% for this group of property) of 10 million or 1.5 million dinars for
Group 3 property.
•
Declining Balance: Company D uses the declining balance method of depreciation. ”