Kuwait Newsletter - Spring 2018

KUWAIT postpone VAT implementation to 2021

Kuwait will not implement value-added tax before 2021 but will push ahead with introducing excise tax, 

Implementation of value-added tax in Kuwait will be postponed until 2021, and that the finance ministry will expedite measures for excise tax on select products such as tobacco, energy drinks and carbonated drinks.

Kuwait has the most powerful parliament in the region, so the delay on VAT looks likely to stick, although cabinet officials have called for faster tax and spending reforms.

Revenues from the new tax could be substantial but Kuwait’s state finances are among the strongest in the region and oil prices have surged in the last several months, so the Kuwaiti government has little immediate need for fresh revenues.

Gulf governments also agreed jointly to introduce an excise tax on tobacco and sugary drinks, which will raise much less money than VAT. Kuwait’s finance minister said that he expected parliament to approve the excise tax during its next session, which begins in October.