Kuwait is considering making major changes to taxation in the country, according to a report in local media.
Citing Finance Ministry sources, the Kuwait Times said the Government is looking to introduce excise taxes in the country.
This will be done instead of bringing in value added tax (VAT).
Kuwait tax plans
Introducing VAT would be politically unpopular and the government will not pursue the plans in the next three years, said the report.
Instead, an excise tax on luxury goods could add more than KD500m ($1.6bn) to state coffers.
This tax is seen as more popular as it will be applied on luxury items and not impact low and middle-income people in the country.
An unnamed source told the Kuwait Times: “The application of excise tax will include tobacco and its derivatives, soft and sweetened drinks and luxury goods such as watches, jewellery and precious stones, as well as luxury cars and yachts”.
Estimates suggest that a proposed tax on these items would be between 10 and 25 per cent.
In accordance with a GCC agreement Kuwait is pursuing VAT, but implementation the tax would need to be approved by the National Assembly.
Inflationary fears and fiscal caution have prevented the arrival of the tax so far.
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