A Selective Tax system to be implemented in Kuwait
Organized By: Gulf News
Kuwait- March 24, 2022:
Due to high inflation rates and turmoil in global markets, both the national assembly and the people of Kuwait are likely to reject the VAT system in future. Hence the Kuwaiti government has deferred its plans to implement value-added tax (VAT) any time soon.
However, Kuwait is contemplating a move towards the implementation of a selective taxation system ranging from 10 to 25 percent. This excise tax will cover tobacco products, sweetened drinks, expensive goods such as watches, jewelry and precious stones as well as luxury cars and yachts, instead of VAT.
Sources expect that the selective tax will fetch around 500 million dinars annually to the government.
Kuwait’s MPs against Imposing Taxes to address Budget Deficit
Organized By: Arabian Business
Kuwait- January 17, 2022:
During the National Assembly’s session, MPs in Kuwait have strongly refused economic reforms that would involve imposing taxes on citizens in the country to address the budget deficit.
According to a state-run news agency, a number of politicians called for solutions to address the country’s budget deficit –A record KD10.8 billion ($36bn) deficit in 2020, up 175 percent from a year earlier.
During the session, the MPs affirmed the need to allow the oil sector to rely on other oil-related substances to create multi-income sources. However, it was emphasized that this solution shouldn’t be touching upon taxation.
Presently, Kuwait does not impose income tax on income earned by individuals. However, companies in the region pay 4.5 percent of their net profits, that includes zakat and labor support and a contribution to the Foundation for the Advancement of Sciences.
Kuwait likely to implement VAT
Organized By: Arab Times
Kuwait – August 23, 2021:
Kuwait will most likely implement the Value Added Tax (VAT) either this year or by next year cites the latest World Bank report on the economies of the member-nations of the Gulf Cooperation Council (GCC).
The World Bank also predicted that the economy of Kuwait will increase by 2.4 percent within 2021; followed by a projected 3.2 percent growth in the next two years — 2022 and 2023.
The projections for Kuwait on the following economic indicators are:
- Real Gross Domestic Product (GDP), percent change: 2.4 in 2021, 3.6 in 2022 and 2.8 in 2023
- CPI inflation rate, percent average: 2.0 in 2021, 2.3 in 2022 and 2.5 in 2023
- Government Revenues, percent GDP: 29.8 in 2021, 31.7 in 2022 and 42.1 in 2023
- Government Expenditures, percent GDP: 52.5 in 2021, 51.0 in 2022 and 50.4 in 2023
- Fiscal Balance, percent GDP: -22.6 in 2021, -19.3 in 2022 and -8.3 in 2023
- General Government Gross Debt, percent GDP: 13.7 in 2021, 27.3 in 2022 and 44.1 in 2023
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Remittance tax back in play as Kuwaiti MPs submit bill
Organized By: Gulf Business
Kuwait- January 18, 2021:
The tax on expatriates’ money remittance is back in the news as Parliamentarians Osama Al-Shaheen, Hamad Al-Matar, Abdulaziz Al-Saqaabi, Shuaib Al- Al- Muwaizri and Khalid Al-Otaibi bring a new proposal on taxing remittances.
At present, the exchange companies are collecting fees for remittances, but the State gets nothing. The State will benefit from remittances through this bill, Al-Shaheen explained.
The Kuwaiti MP stated that roughly KD 21 bn has been transferred out of Kuwait in the past five years – averaging KD 4.2 bn every year. Based on these figures, some KD 100 m can be collected every year by imposing the fee. He disclosed that the draft submitted aims to enhance the public budget, support the domestic economy, generate more opportunities and avoid capital leaving the country.
This bill amends law number 32/1968 which regulates the currency, Central Bank of Kuwait (CBK) and banking procedures. The article mandates the Central Bank of Kuwait to take the necessary steps to obligate local banks, branches of foreign banks and money exchange companies to collect tax on remittances – at a rate of 2.5 percent regardless of the currency. This tax will be added to the State treasury.
Money transfers related to agreements on investment protection and money transferred by the government are tax-exempt. The Central Bank must exempt Kuwaitis studying abroad, those undergoing treatment overseas treatment, and if the transferred amount is less than KD 10,000 per year from paying such tax.