After approving a plan to slash the rate of company tax for foreign companies, the Kuwaiti government has reportedly drafted a new law which could mean that individual incomes are taxed for the first time in the country.
According to a senior finance ministry official who was quoted in the national media, the government is planning to introduce a 10% flat rate of income tax, which will be applied regardless of nationality.
Oil rich Kuwait currently depends on oil sales for about 90% of its revenues and is keen to secure stable sources of revenue for the future, when oil stocks evetually begin to dwindle.
"This is a comprehensive law, it covers every kind of income without regard to the nationality of the taxpayer," the official was quoted as stating.
Kuwait is home to a large expatriate population, attracted by the country's lack of income tax; it is estimated that almost 1.3 million of Kuwait's 2.4 million total population are non-nationals.
A comprehensive tax law has reportedly been drafted by the finance ministry with input from a Dutch financial institution, and has been forwarded to the cabinet for consideration by the rest of the government.
"Financial and economic reform cannot be achieved without developing the tax system similarly to what is being applied in both industrial and developing countries," Finance Minister Bader Al Humaidhi told the cabinet in a statement.
According to the Kuwait News Agency, the law aims to provide a "suitable investment climate in Kuwait".
However, Humaidhi denied that the new law will result in an income tax, and has been quoted in the Arabic media as saying that the government has "no intention" of taxing individuals' income.
Regardless of the seeming confusion over this matter, foreign companies are likely to welcome the cabinet's approval of a new law slashing corporate tax to 15% from present rates of up to 55%.
The new income tax law will be referred to parliament after the election of a new assembly on June 29.
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