By Neil Halligan
Diminishing oil revenue sees officials look at ways of generating more income
Kuwait plans to introduce corporate tax for local companies in a bid to raise more revenue, as earnings from oil continues to drop.
A visiting delegation from the International
Monetary Fund (IMF) was tasked to study the tax reforms in Kuwait by the country's Ministry of Finance as it seeks economic reforms, which include adapting a tax system to be the catalyst to increase the state's non-oil revenues.
Following a meeting with a visiting IMF delegation, Commerce and Industry Minister Abdul Mohsen Al Mudej said the government is looking at how to impose tax on companies in Kuwait.
“The IMF will prepare a preliminary report on how to impose taxes on companies in Kuwait,” Al Mudej told the KUNA news agency.
The IMF delegation discussed with the Ministry officials a number of articles of the new companies' law and the procedures it is taking in dealing with the imposition of taxes in order to reach a comprehensive understanding before handing the final report to the Ministry of finance, Al Mudej said.
He added that the IMF has been a consultant for a significant number of governmental projects and development plans in Kuwait for many years.
Kuwait's government budget surplus shrank 26 percent in the first nine months of this fiscal year as lower oil prices cut revenue sharply, analysts at National Bank of Kuwait (NBK) calculated, using Ministry of Finance data.
AFP reports that Kuwait has posted a budget surplus in each of the past 15 fiscal years due to high oil prices but has also increased public spending from under $13 billion to more than $77 billion this fiscal year, mostly on wages and subsidies. Income from oil contributed around 94 percent of Kuwait’s public revenues, which has dropped substantially after the sharp drop in prices.
Kuwait ended its diesel, kerosene and aviation fuel subsidies earlier this year, with similar plans considered for petrol, electricity and water.