Kuwait postpones VAT until 2021

The Kuwaiti government has announced that it will not implement value-added tax before 2021. Instead it will continue with the introduction of an excise tax on certain goods.

A statement from the parliament’s budget committee confirmed the postponement of VAT but said “the finance ministry saw the need to expedite measures for excise tax on select products such as tobacco, energy drinks and carbonated drinks”.

Gulf countries had originally agreed to bring in VAT at a rate of 5% at the beginning of the year, however only the UAE and Saudi Arabia have done so thus far.

The UAE’s federal tax authority stated that almost 275,000 companies had registered for VAT in the first 100 days since its implementation on January 1 and that there was 98% compliance. However the FTA’s director-general Khalid Ali Al Bustani also added that “there are a large number of companies that have not registered yet”.

The International Monetary Fund has forecast that VAT will eventually contribute to 1.5% of UAE’s gross domestic product.

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