Kuwait To Delay VAT Implementation Until 2021, Excise Tax To Be Introduced
Kuwait’s parliament budget committee announced on their website on 15 May 2018 that it will postpone the implementation of VAT until 2021.
Initially in 2017, all the member countries of the Gulf Cooperation Council (GCC) mutually agreed to introduce VAT in January 2018. However only the U.A.E. and Saudi Arabia have implemented the VAT so far.
According to the Kuwait Times newspaper article, Kuwait to postpone VAT implementation to 2021, published on 15 th May 2018, the Kuwaiti government has no immediate requirement for new sources of revenue as the state’s finances are among the strongest in the region and also the oil prices have increased over the past several months.
The decision may cost Kuwait up to 1.6 per cent of its $114 billion of gross domestic product in foregone revenues, although the net fiscal effect will be more than offset by the recent rise in oil prices, according to a Moody’s report. The report went on to say that the decision clearly illustrates how if oil prices remain around their current levels, the resolve for reform among some GCC countries is likely to weaken.
On excise tax, the Finance minister of Kuwait stated that excise tax on tobacco, energy drinks and carbonated drinks will be implemented soon in the nation. He expects the parliament to approve the excise tax during its next session in October. However this will raise much less revenues as compared to the VAT.