Tax and fee revenues are projected to see a significant increase in the upcoming period, with expectations to reach approximately 1.1 billion dinars. This marks a 73% rise compared to the 613 million dinars expected to be collected in the current fiscal year 2024-2025 budget.
The increase in tax revenues is attributed to the recent tax reforms announced by the government, beginning with the approval of a tax law on multinational entities, which is expected to generate around 250 million dinars annually.
Additionally, the government is working on preparing a selective tax law targeting goods harmful to health, with anticipated revenues of approximately 200 million dinars per year.
The budget law for the current fiscal year (2024/2025) estimates that fees and taxes will generate approximately 613.1 million dinars. Of this amount, income, profit, and capital gains tax revenues are expected to reach 175.1 million dinars.
Property taxes for the current fiscal year are estimated at approximately 20 million dinars, while taxes on trade and international transactions are expected to generate around 418 million dinars.
This step bolsters progress toward realizing the government’s economic reform vision and achieving a balanced national economy structure. It supports the long-term sustainability of economic and social welfare by reducing the budget’s heavy reliance on oil revenues, which account for approximately 85.8%.
Additionally, it aims to increase the share of non-oil revenues in the general budget, thus mitigating the risks associated with the chronic deficit faced by the general budget.
5 Types of Taxes
The current tax system includes 5 types of taxes, which are as follows:
1- Income Tax:
It is applied based on Income Tax Decree No. 3 of 1955, as amended by Law No. 2 of 2008, which imposes an annual income tax on every foreign entity or institution conducting business or trade in Kuwait. The tax is set at 15% of the net taxable income derived from its activities in the country.
2- Support for Workers:
Law No. 19 of 2000, aimed at supporting national labor and encouraging its employment in non-governmental entities, imposes a tax of 2.5% on the annual net profits of Kuwaiti and Gulf companies listed on the Kuwait Stock Exchange.
3- Zakat and Contribution to the Budget:
Law No. 46 of 2006, regarding Zakat and the contribution of public and closed joint-stock companies to the state budget, stipulates that 1% of the net profits of Kuwaiti companies be calculated annually. This contribution is intended to support the state’s general budget.
4 – Dividends:
It is a tax imposed at a rate of 15% on profits resulting from the distribution of shares, as outlined in Article 9 of the Executive Regulations of Law No. 2 of 2008, which amended certain provisions of the Kuwaiti Income Tax Decree No. 3 of 1955.
5- Multinational Entity Tax:
It is the latest tax law in Kuwait, which imposes a 15% tax on multinational entities under specific conditions. The expected annual revenue from implementing this tax is approximately 250 million dinars.
Selective Tax Bill
According to official statements, the government is preparing a draft law on selective taxes, which would impose taxes of up to 100% on tobacco, energy drinks, and soft drinks. The government expects these tax revenues to reach approximately 200 million dinars annually.
In November 2016, the Gulf Cooperation Council (GCC) countries agreed to apply value-added tax and selective tax on a number of harmful goods to reduce their consumption. However, this was implemented in all GCC countries except Kuwait.
In this context, the Ministry of Finance is working to accelerate the completion of the tax administration development project, which will enable it to effectively manage current tax laws as well as any future tax regulations introduced.
65 Million Dinars Expected Savings from Rationalizing Diesel Subsidies
Related sources revealed that the government expects to save about 65 million dinars annually by rationalizing support for commercial diesel fuel directed to companies in the local market.
The relevant authorities are currently studying the liberalization of the selling price of commercial diesel fuel to commercial companies, with the possibility of pricing it according to global market rates.
Source: Al Qabas
