Kuwait plans VAT bill vote by year-end – report

Kuwait’s government is aiming for a parliamentary vote on a controversial value added tax (VAT) bill to take place before year-end, according to reports.

Kuwait Times cited sources as confirming the timeframe, which would come in contrary to a previous update from the National Assembly’s budget and final accounts committee.

The committee said in website statement in May that the government planned to delay the implementation of the 5 per cent VAT until 2021 but wanted to speed up the implementation of a selective tax on tobacco, energy drinks and soft drinks.

Read: Kuwait to delay VAT implementation until 2021

Both taxes are part of a Gulf Cooperation Council agreement and have been implemented by Saudi Arabia and the UAE.

Under the government’s plans, an economic affairs committee is making the final touches to the VAT bill before it is referred to the Fatwa and Legislation Department to be rephrased in a way that is compatible with Kuwait’s constitution, the sources told the publication.

Following this, the parliament’s financial affairs committee is likely to receive the VAT bill in September to discuss it before the parliament resumes sessions the following month.

A vote is then expected before the end of the year.

“The government is very keen on passing the VAT law to achieve the economic reforms suggested by IMF and follow the steps of Saudi Arabia and the United Arab Emirates,” a source was quoted as saying.

Kuwait was originally expected to implement the VAT, which applies to most goods and services, next year under a Gulf Cooperation Council deal.

Read: Revealed: Goods and services subject to VAT in the UAE

Saudi Arabia and the UAE implemented the tax on January 1 and Bahrain and Oman have indicated they will do so in 2019.

Read: Oman postpones VAT introduction until 2019

Recovering oil prices may have reduced the urgency for the tax’s implementation in some Kuwait, which fared better financially than many of its Gulf when crude prices slumped.

The government has also seen resistance to the tax from lawmakers, who want the government to ensure it does not burden citizens.

Read: Kuwait MPs say they will oppose VAT bill

In other moves, the sources said the cabinet had rejected parliamentary demands to cancel increases to fuel, electricity and water prices and a proposed tax on the remittances of foreign workers due to concerns it would harm the economy.

The financial affairs committee approved a draft law to implement the tax in April despite warnings from the country’s central bank.

Read: Kuwait MPs to discuss remittance tax amid central bank warnings