KuwaitNews
Trending

Implementation Of Integrated Tax System Expected To Take 3 To 4 Yrs

There is still an open discussion locally about the possibility of imposing taxes as part of implementing financial and economic reform programs, rationalizing expenditures and diversifying the sources of income. However, informed sources revealed that it will be difficult to achieve this in the short term, as imposing taxes requires time and prior measures, reports Al-Rai daily.

The sources explained that an international consultant whom the Ministry of Finance is seeking advice from in this regard expects the implementation of an integrated tax administration system in Kuwait will take between three and four years, especially if the fractured relationship between the executive and legislative authorities continues to impede policy-making and undermine the state’s ability to implement this procedure.

Analytically, this advisory opinion was based on a number of considerations, the first of which is that there are two tax laws that were submitted to the National Assembly previously as part of the Gulf Cooperation Council agreements. They are the excise tax imposed on tobacco, soft drinks and energy drinks, and the Value-Added Tax, which is different from the income tax, which is completely ruled out. Despite this, a great parliamentary resistance was noticed to the extent of rejecting the two tax bills in spite of the government’s assurances that the ordinary citizens will not be affected by these two taxes.

Postpone

Amid a lack of agreement by the parliament to approve the law, the government was forced to postpone the implementation of the Value-Added Tax until 2021. It is likely that the law will not be approved, especially if the state of political inconsistency persists.

In Kuwait, there are no direct taxes on citizens, but only agreements with the countries of the Gulf Cooperation Council either in selective taxes or value added tax. There are unified tax procedures, which are regulatory procedures. There are taxes imposed on companies at about 4.5 percent of their net profits, including zakat and financial support, and the percentage determined for the Kuwait Foundation for the Advancement of Sciences.

Of course, the growing differences between the two authorities do not constitute all the challenges facing the application of local taxes.

The sources indicated that the tax procedures do not only need tax laws, but modernizing the tax system in the country would be made possible by providing the infrastructure for direct and indirect taxes.

They explained that this technically requires the application of a new and integrated tax system to replace the current system, and this will take into account digitization, integration and speed of implementation according to one of the global tax systems. However, it should be able to accommodate any laws that may emerge in the future in a way that helps in facilitating tax inventory and collection.

Relationship

Although the Ministry of Finance is proceeding with the supply, installation and operation of the integrated tax management system and electronic services “ITAS” to be put up in a public tender, the more the matter arises, the more complex the relationship between the government and MPs, as well as with citizens opposing this approach, becomes.

Moreover, the management of the tax system needs sufficient information and great specialized expertise among those in charge of it. In practice, this type of experience is not available in a large percentage, because tax is locally an uncommon culture and thus reduces the chances of having specialized expertise in these systems.

In return, there will be a tendency to outsource training and management expertise for some time. In all cases more time is needed.

The sources added that the expanding political dispute locally and the lack of an infrastructure to implement the tax system, in addition to the limited local expertise specialized in taxation, increase the validity of expectations that the implementation of the integrated tax administration system in Kuwait will take three to four years.

It is worth mentioning that the Minister of Finance Khalifa Hamadeh is expected to record a cumulative deficit of KD 55.4 billion in the five fiscal years from 2020/2021 to 2024/2025. It is likely that the deficit in the state budget for the 2021/2022 fiscal year will reach about KD 12.1 billion, through a budget that includes expenditures of KD 23 billion, and about KD 10.9 billion worth expected revenues.

 

SOURCE  ARABTIMES

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Support us by allowing our Ads to show on our website!