Kuwait Eyes Corporate Income Tax
March 17, 2015 International Tax Cooperation
KUWAIT CITY – Kuwait, which is facing a budget deficit for the first time in 16 years, is now mulling the possibility of levying a corporate income tax.
On March 16th the Minister of Commerce and Industry of Kuwait Abdulmohsen Al-Medaij announced that the government asked for assistance from the International Monetary Fund to plan a new corporate income tax to be levied on the profits of local companies.
Currently companies registered in Kuwait are not required to pay any form of income tax, and only foreign entities doing business in the country are subject to a tax of 15 percent on annual profits.
Over the last 15 years tax revenues in Kuwait have risen steadily due to increases in the international price and demand for oil, however in that same time frame the government has increased its expenditures by 5.9 times, and presently due to the ongoing increases in expenditures and the sudden decline in the price of oil, the government is facing a significant deterioration in its fiscal position.
Over the course of the current financial year the revenues collected in Kuwait have already fallen 16 percent, and unless the price of oil rises again, the national budget may reach a deficit in 2016, the first time in 16 years.
The implementation of a tax on corporate profits is designed to help the government reduce its reliance on the fluctuating price of oil.
Photo By: Ken Doerr