Government has submitted a request to the National Assembly to expedite the ratification of the unified agreement for the selective tax, known as ‘Harmful Goods Tax’, ahead of its approval as a tax law in Kuwait.
Deputy Prime Minister, Minister of State for Cabinet Affairs, and Minister of State for National Assembly Affairs, Issa Al-Kandari, sent a letter to the Speaker of the National Assembly requesting urgency and to include it in the agenda for next Tuesday’s session. The proposal also included a comprehensive presentation of the justifications for urgency from Finance Minister Fahd Al-Jarallah.
The finance minister confirmed that the ratification of the unified agreement across the Gulf Cooperation Council (GCC) states does not mean the start of implementing the excise tax. Parliamentary ratification will need to be followed by the submission of a draft law that includes defining the goods subject to the tax and the provisions for application, and it will need to be discussed in the National Assembly.
The government also stressed that the excise tax does not affect the cost of living for citizens, and is imposed on goods that are harmful to health, and in Kuwait it is limited to only four goods — tobacco and its derivatives, energy drinks, soft drinks and sweetened drinks.
Al-Jarallah pointed to the challenges facing the Kuwaiti market due to the non-implementation of the excise tax, including the negative phenomena and economic repercussions in light of all other GCC states, with the exception of Kuwait, imposing this tax. He noted that the neighboring countries in the region imposed a selective tax on tobacco and its derivatives, which led to the spread of smuggling these products from Kuwait to those countries, in addition to the companies that sell them in Kuwait raising their prices.
Minister Al-Jarallah also explained that the tax will increase income for the state in non-oil revenues, in addition to the fact that a portion of the proceeds of these revenues can be used to confront the health and social damages resulting from the consumption of these goods.
He also clarified that there is no link between the excise tax and the value-added tax (VAT), as the latter affects all goods and services that the citizen consumes, with some exceptions, which makes it require more time and effort to discuss and decide on it. As for selective tax, it has a fundamental goal that distinguishes it from other taxes as it is only imposed on goods that are harmful to health and aims to reduce consumption of these goods.
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