ERBIL, Kurdistan Region - Erbil and Baghdad remain at odds over the Kurdistan Region's share of Iraq's 2027 federal budget, oil handovers, and tax and customs revenues, an Iraqi lawmaker told Rudaw on Wednesday.
Dilan Ghafoor, a member of the federal parliament's finance committee, told Rudaw's Zhinar Star that negotiations between the federal and regional governments were ongoing but that no breakthrough had yet been achieved.
“So far, no agreement has been reached on the Kurdistan Region's budget share, and talks are ongoing,” said Ghafoor, a prominent Patriotic Union of Kurdistan (PUK) member who has served multiple terms in the Iraqi parliament.
Iraq “is demanding that [the Region's] tax and customs revenues be returned to Baghdad, but the Kurdistan Region does not agree,” she added.
The Kurdistan Region is seeking a 14.14 percent share of the federal budget, based on the latest general census, while Baghdad has retained a 12.7 percent allocation in the draft.
Ghafoor said Baghdad's position was based on excluding displaced people, residency permit holders and naturalized citizens from the Region's population calculation.
Oil deliveries are another major point of contention. Baghdad is demanding that Erbil hand over 400,000 barrels per day (bpd) starting next year, while the latter is seeking a lower figure of between 250,000 and 280,000 bpd, according to the lawmaker.
The two sides also remain divided over tax and customs revenues. Baghdad considers the revenues sovereign and therefore payable to the federal government, while the Kurdistan Region rejects that interpretation.
The dispute comes as Iraq prepares its 2027 federal budget, with the draft still under review by the government ahead of its expected submission to parliament.
Iraq is also facing acute fiscal pressure, with state revenue reaching 39.09 trillion dinars ($26 billion) in the first seven months of 2026, while expenditure stood at 68.26 trillion dinars ($45.5 billion), leaving a deficit of more than 29 trillion dinars ($19.4 billion). The shortfall came as oil revenue fell sharply amid disruptions to shipments through the Strait of Hormuz triggered by the Iran war.
Erbil and Baghdad have been at odds over the Kurdistan Region's share of the federal budget since 2014, when a dispute over the Kurdistan Regional Government's (KRG) independent oil exports to Turkey escalated into a protracted political and financial standoff.
Kurdistan Region President Nechirvan Barzani last month called for permanent solutions within the framework of the Iraqi constitution to longstanding disputes between Erbil and Baghdad - particularly over federal budget allocations, public sector salaries and the oil and gas file.
Speaking at the Slemani Summit, an annual economic gathering in the Kurdistan Region's eastern Sulaimani province, the Kurdish leader underlined that “political disagreements” between the federal and regional governments “must not create obstacles for trade and investment.”
“We must reach a clear constitutional framework with the federal government regarding financial issues, customs and taxes,” he said.
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