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Tax reforms to include selective consumption tax

The government is considering the imposition of selective consumption tax on specific goods that harm public health, such as cigarettes and other tobacco products.

Disclosing this in an interview with state news agency, Minister of Finance, Minister of State for Economic Affairs and Investments Nora Al-Fassam said that the finance ministry was preparing the selective taxation law targeting commodities harmful to human health, with projections the levies would reap KD 200 million per year.

She added that another major step being considered as part of the wider tax reforms being planned for implementation, is one on imposing a levy on corporate incomes.in addition to the decree-into-law 6/2024 for the Exchange of Information for Tax Purposes, and the decree 157/2024 for taxation of multinational enterprises, which came into force from 1 January 2025.

Alluding further to some of the moves for taxing reforms, the minister cited the enactment of treaties on double taxation, combating financial evasion, working out accords for encouragement and mutual protection of investments, in addition to ratifying some international treaties in the realm of taxation cooperation.

She indicated the entities that are compelled to pay the taxes according to the decree-into-law 157/2024 would not be compelled to pay levies for workers as stipulated in the law 19/2000, neither with respect of the alms proportion stipulated in the law 46/2006 for the period that began on 1 January, 2025.

Al-Fassam further clarified that companies legally obliged to pay financial contributions to Kuwait Institute for Scientific Research will continue to do so, and that decree into law 157/2024 mentions no leeway for these companies. She added that government entities, non-profitable organizations, international agencies, pension and investment funds were exempt from taxation under 157/2024.

Taxing multinational entities under 157/2024 is projected to yield around KD250 million annually to the government treasury, with a preliminary count of entities in Kuwait liable to pay the new tax being around 300, including 20 Kuwaiti enterprises and 25 from other Gulf Cooperation Council (GCC) states, and the remaining being foreign firms that operate in Kuwait.

Minister Al-Fassam affirmed that enforcing the tax is in line with the State of Kuwait vision 2035, aimed at achieving a diversified and sustainable economy, and that the proceeds would contribute to diversifying the non-oil returns and stem the siphoning of the returns to other states. She added that implementing the tax on multinational entities would also contribute to boosting Kuwait’s role at the level of international cooperation for achieving just taxing practices.



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