Government rules out VAT in 4-year plan; excise duties favoured until then
Kuwait’s government’s new 4-year plan has ruled out the implementation of VAT. In 2017, Kuwait signed the Gulf Cooperation Agreement pact on a VAT and Customs Union. So far, only Kuwait and Qatar have failed to introduce VAT.
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. The government will proceed with the introduction of excise levies on tobacco, watches, jewellery, 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.
Kuwait 2023 plans now shelved
175 countries have a VAT or GST regime as at February 2025.
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.
Get our global VAT and GST free news emails, sign-up here.
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
|Kuwait decides between VAT or excise taxes
|Qatar delays VAT on inflation worries
|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
|VAT and Customs Union agreement: Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE United Arab Emirates