Kuwait Cuts Tax On Foreign Firms

by Lorys Charalambous, Tax-News.com, Cyprus

26 May 2006

Kuwait's government has approved a new law that would replace the country's currently unattractive tax regime for foreign companies with a new 15% flat rate of income tax.

According to the Kuwait News Agency (KUNA), the bill will be sent to a legal committee before ratification by the Amir.

Although parliament has been dissolved, the new Assembly, to be elected on June 29, can still vote on bills passed after the dissolution of its predecessor.

While domestic firms in Kuwait are untaxed, under a 1953 statute, foreign firms can pay income tax at a rate of up to 55%.

“The bill tackles shortcomings and gaps of the current law," KUNA stated.

Notably, the bill seeks to eradicate "the steepness of the tax level compared to other countries which led companies to avoid working in Kuwait."

The report added that the new tax law will not only encourage more foreign firms to set up in Kuwait, but will also protect consumers in the country from the impact of high taxation on these companies.

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