The impacts of the implementation of the VAT in Kuwait

The impacts of the implementation of the VAT in Kuwait

As for Kuwaiti business projects and Kuwaiti traders, they are not submitted to taxation concerning the income tax resulting from operating of their projects, and they only have to pay the national labor support tax at a rate of 2.5%, Zakat at a rate of 1%, and the Kuwait Foundation for the Advancement of Sciences tax at a rate of 1%.

This light tax burden helps to raise the standard of living of the Kuwaiti citizen, and allows the Kuwaiti merchant to compete favorably over the foreign businesses that are established in the country.

In any case, the policy of exempting citizens from income tax does not appear to be in line with the principles of the World Bank, which always seeks to eliminate any preferential treatment that differentiates between a local and a foreign investor.

This bank usually considers that it is not permissible to give preference to the national investor or the one who establishes a national company over the foreign investor, or even to the companies that open branches in the country; because this preferential treatment creates a kind of inequality in competition.

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