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Kuwait mulls introduction of corporate taxes

Kuwait is working out plans with the International Monetary Fund (IMF) to discuss introduction of corporate tax for local companies, the Commerce and Industry Minister, Abdulmohsen al-Madaj said.

The Minister said that the Finance Ministry has requested IMF to study possible tax reforms.

The government is working on changing its tax system to diversify revenue sources and also to increase its non-oil revenues.

Introduction of a new corporate tax would be a major, politically sensitive shift in policy as far as Kuwait is concerned, and for the wealthy Gulf oil exporters in general, as till date, they have largely depended on their oil revenues to avouid direct taxation of corporate profits.

Currently, companies in Kuwait do not pay taxes on income. But, foreign firms pay a tax on commercial activities in the country.

Just as is the case with other Gulf countries, finances in Kuwait too has been facing some difficult times due to the plunge in oil prices last year. Hence, the State has been considering ways to strengthen its finances. Early this year, Kuwait increase the prices of diesel fuel and kerosene at filling stations, and later partially reversed the hikes due to public criticism.

The IMF has been suggesting Kuwait to diversify its revenues through tax reforms and other measures, over the last few years.




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