No VAT under Kuwait’s four-year plan of action

Government aims to introduce excise and corporate taxes within three years

Kuwait’s new Prime Minister Sheikh Dr Mohammed Sabah Al Salem presented his government’s action plan for the next four years to parliament on Tuesday.

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At its heart are a number of economic reforms but it stops short of introducing VAT.

The 34-page document, seen by media before it was presented to parliament, proposes the introduction of excise and corporate taxes within three years.

The Kuwaiti government has long been wary of introducing VAT despite a deal with the Gulf Co-operation Council in 2017.

While the government’s vision focuses on three pillars – justice, security and sustainability – the cabinet may still reform the subsidies system, Sheikh Dr Mohammad told reporters at Seif Palace in Kuwait City.

He proposed ensuring fair distribution, with a focus on supporting the middle class.

“The middle class must have the lion’s share of the support, while the high-income class can give up part of this support in favour of those who need it most,” the Prime Minister said.

Before the announcement, the Kuwaiti government asked parliament to postpone a debate on two bills regarding personal interest-free loans and long-awaited legislation under which some citizens would receive additional cost-of-living allowances.

The request to defer the debates for a month was rejected, however.

“Everyone is in favour of improving living conditions, not through stubbornness but rather through agreement with the government,” MP Adel Al Damkhi said on Tuesday. “Postponing the laws to improve living conditions for a month must be matched by the government’s commitment to these laws and controlling prices.”

Sheikh Dr Mohammed said Kuwait could no longer “sustain a welfare state solely on depleted natural wealth”.

“We have put forward plans to transform depleted natural wealth into renewable resources, shifting our focus on intensive investment in human capital and the use of technology and artificial intelligence,” he said.

Emir Sheikh Meshal has up to a year to nominate a crown prince, in accordance with the constitution.