Lima can help you with your tax assessment and ensure that you comply with all the VAT laws. Lima tax consultant have a years of experience with regards to VAT Consultancy. We would make no calculation errors with taxes, ensure that client’s stays prepared, and offer valuable tax advice. VAT is a newly introduced tax law in Kuwait is yet to be implemented. It is essential to be prepared in advance to avoid penalties and legal issues.

VAT 

All representatives of the Member States of the GCC including Kuwait confirmed the introduction of a VAT law across all Member States through the signing of a VAT Framework in 2017. The framework acts as white paper for the VAT legislation in each Member State by stipulating certain rules. It must be followed in spirit by all member countries with the option to opt for different VAT treatments concerning some supplies. 

In March 2018 the Kuwait National Assembly pushed back a vote on the implementation of a VAT system. Reuters previously reported that Kuwait’s VAT system introduction would be postponed until 2021.

Kuwaiti Parliament Budget Committee confirmed, the introduction of Value Added Tax (“VAT”) will not take place until 2021. Instead, the Kuwait government intend to focus their efforts on bringing Excise Tax into effect on selected products such as tobacco, energy drinks and carbonated drinks.

EXPECTED VAT IN KUWAIT

The new VAT regulation in Kuwait will be similar to the VAT Framework Treaty. It would form the basis of domestic VAT legislation in Kuwait. The framework needs to be followed by all the GCC countries with all key regulations of the VAT law.

VAT Framework Treaty provides that VAT on the supply of goods or services within the scope of VAT will be charged at a rate of 5% unless the goods or services are exempt or zero-rated. The Member States have been granted the flexibility to choose whether the supply of specific goods or services is considered as zero-rated or exempt. 

The Member States have been granted the flexibility to choose whether the supply of specific goods or services are considered treated as zero-rate or exempt. While being required to either exempt or zero-rate other specific supplies. The distinction between zero-rating and exemption is an important one; in both cases VAT must not be accounted on the supply, a supplier making exempt supplies is generally not allowed to recover input VAT in relation to such supplies.