Foreign Oil Companies Face Tax Hikes as Government Introduces New Regulations
Kuwaiti Government Announces New Regulations to Increase Revenue from Foreign Oil Companies
The Kuwaiti government has announced a series of new regulations aimed at increasing revenue from foreign oil companies operating in the country. The measures, which come into effect immediately, will see a hike in tax rates for these companies, as well as changes to the way taxes are calculated and paid.
Tax Rate Hikes and Changes
According to officials, foreign oil companies will be subject to a tax rate ranging between 15% and 35%, depending on the type of activity they are engaged in. The competent technical departments in the Ministry of Oil will determine which activities are considered “oil” and which are not, in order to determine the amount of tax deduction.
New Tax Calculation System
In addition, the government has introduced a new system for calculating taxes, which will see withholding taxes being collected at the General Treasury Department (GCT) rather than at border crossings. Taxpayers will also be required to submit a document proving their clearance issued by GCT, in order to avoid any potential issues.
Resistance from Foreign Oil Companies
The new regulations have been met with resistance from some foreign oil companies, who claim that they are unfair and could lead to increased costs for consumers. However, government officials argue that the measures are necessary to ensure that the country’s tax system is fair and equitable.
Individuals Affected
Individuals who import personal cars for personal use will have their registration cancelled once during the fiscal year, without the need for having a registration or tax record. Private transportation vehicles, loads, mass transportation, and work vehicles are also subject to tax, with amounts determined in fixed amounts.
- Low-income earners may not be required to approach GCT or its branches if their income is within the limits of tax allowances.
- If these limits are exceeded, individuals must approach GCT or one of its branches, otherwise they will be subject to legal accountability.
New Systems and Procedures
The government has also introduced a new electronic archiving system for files, which aims to organize and facilitate access to tax information in an effective and timely manner. All departments of GCT are included in the plan, starting with corporate departments and ending with departments of large income taxpayers and direct deductions.
- Duplicate names will be removed from computer systems.
- Settlement of fines and interest for owners of factories, laboratories, and tourist facilities will be carried out within a specific period.
- The Financial Supervision Bureau will participate in audit processes to ensure integrity.
Cabinet Decision
The Council of Ministers has also issued a decision (No. 23527 of 2023) which includes accepting the accounts and financial statements approved by a licensed auditor and certified by the relevant professional council, provided that they are stamped and signed by the auditor and taxpayers.
- Taxpayers must pay the tax and clear their liability directly based on previously mentioned data.
- Auditing the accounts submitted according to a coordination mechanism between GCT, the Federal Board of Supreme Audit, and the Society of Certified Public Accountants.
Full Implementation
The new regulations are expected to come into full implementation within the next 90 days, with taxpayers required to approach GCT or its branches to determine the stability of tenders or contracts. Taxpayers who fail to comply with the new regulations may be subject to legal penalties and fines.
It remains to be seen how foreign oil companies will react to the new regulations, but officials are confident that the measures will help to increase revenue for the government and ensure a fair and equitable tax system for all taxpayers.