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Kuwait VAT implementation delayed at least 3 years

Government and parliament opposition to Kuwait joining of Gulf States in VAT union; excise duties favoured until then

Kuwait Ministry of Finance is said to be against the long-expected introduction of VAT in accordance with the 2017 Gulf Cooperation Agreement 6-state deal.  This committed all states to join a VAT and customs union. Alongside Kuwait, only Qatar has not done so yet.

Instead, the government will look at customs duties since the economy and consumer confidence is believed to be still recovering from the global slow down and inflation spike. Instead, the government will proceed with the introduction of excise levies on tobacco, watches, jewelry, luxury cars and yachts. It may also be extended to unhealthy foods, including sugary drinks

Kuwait’s parliamentary elections in October 2022 had increased opposition party hold on the legislature meaning a break-through on the introduction of a Value Added Tax regime is unlikely in the next three years.  Opposition parties are against the tax and other economic reforms on the basis that they hit the poorest hardest.


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Kuwait 2023 plans now shelved

175 countries have a VAT or GST regime as at July 2022.

The Gulf state is one of the last two holdouts not yet to introduce a Value Added Tax regime under the 2017 Gulf Cooperation Council agreement to create a VAT union. The other is Qatar which may expect to launch VAT in 2024.

Instead of VAT, Kuwait is now exploring an excise or turnover tax on a limited range of supplies, including tobacco and related products, soft and sweetened drinks, expensive goods such as watches, jewellery and precious stones as well as luxury cars and yachts.

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Two rates are being considered: 10% and 25%.

Gulf Cooperation Council 2017 VAT agreement

The six Gulf states agreed in 2016 to introduced VAT in their respective states, and to create a VAT and Customs Union – similar to the European Union model. This would seek to harmonise the rules keep rates broadly similar. The all signed the a unified agreement, and it came into force on 1 February 2017.

Preparing VAT returns For any of the Arab Gulf states can be challenging.  VAT Calc’s single platform VAT Filer can accurately complete any country filings with verified transactional data from our VAT Calculatoror VAT Auditor integrated tools.


Arab Gulf GCC VAT implementations

2023 Kuwait decides between VAT or excise taxes
2023 Qatar delays VAT on inflation worries
Jan 2022 Bahrain doubles VAT to 10%
16 Apr 2021 Oman introduces 5% VAT
1 Jul 2020 Saudi Arabia trebles VAT to 15%
1 Jan 2019 Bahrain launches 5% VAT regime
1 Jan 2018 Saudi Arabia and UAE introduce 5% VAT regime
2016 VAT and Customs Union agreement: Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE United Arab Emirates


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