Kuwait has sought help from the IMF to introduce corporate taxes in a bid to diversify revenue in the face of falling oil prices, a minister said.
“The IMF will prepare a preliminary report on how to impose taxes on companies in Kuwait,” the commerce and industry minister Abdulmohsen Al Mudej said after a meeting with IMF representatives, the official Kuna news agency reported.
The two sides discussed ways of introducing corporate taxes for Kuwaiti and foreign companies operating in the oil-rich Gulf state after the recent introduction of a new corporate law, the minister said.
Kuwait currently imposes no taxes on local companies, Kuwaiti citizens and expatriates but it requires foreign firms to pay 15 per cent tax on their profits. The IMF has in the past advised Kuwait to subject local companies to corporate tax as part of a series of measures aimed at boosting non-oil revenues and cutting spending.
Kuwait has posted a budget surplus in each of the past 15 fiscal years owing to high oil prices but has also increased public spending from under less than US$13 billion to more than $77bn this fiscal year, mostly on wages and subsidies.
Earlier this year, the emirate stopped diesel, kerosene and aviation fuel subsidies and the finance ministry is considering similar measures for petrol, electricity and water.
Oil income contributed about 94 per cent of Kuwait’s public revenues, but the sharp drop in prices is expected to substantially reduce its income.
It pumps about 2.8 million barrels of oil per day.
* AFP
