The International Monetary Fund has advised Kuwait to introduce a unified ten per cent tax on local and foreign companies’ profits, while abolishing all other taxes.
The proposal would make KWD500 million to KWD800m available, reports Al-Rai newspaper, citing remarks by an IMF official.
Small and medium enterprises that can’t reach a specified level of profits are exempted from paying the tax as per the proposal, according to Prasad Ananthakrishnan, IMF’s Deputy Division Chief, Middle East and Central Asia Department.
Regarding the introduction of a Value-Added Tax (VAT), Ananthakrishnan, who leads the yearly IMF mission to appraise the economic situation of Kuwait, says it is left to member states of the Gulf Cooperation Council to decide when the tax should be activated and on what goods and commodities.
He said that it was reported that GCC countries will introduce a five-per cent VAT but nothing was confirmed.
Again, the IMF official renewed the fund’s call on Kuwait and other GCC countries to reform the blanket fuel subsidy system.
Speaking on Kuwait’s budget deficit projections, Ananthakrishnan said the IMF mission will release the figures soon, noting the current low prices of oil will impact financial accounts and growth for 2014 and 2015.
(KWD1 = AED12.16, at the time of publishing)