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Kuwait to consider local and foreign corporate tax rate harmonisation

Kuwait will table a bill on harmonised corporate tax rates for local and foreign firms in around two years time, Trade Arabia said11 Jun 2015

"We are looking at many, many scenarios ... but we are definitely looking at matching them. We need to draft legislation ... in 24 months we should have a law that can go to parliament," Finance Minister Anas al-Saleh said at a conference in London, according to Trade Arabia.

In April, Kuwait's government said it was looking at proposals to introduce the same levy for domestic firms as for foreign. Domestic firms currently pay very little tax on income, while the foreign companies are taxed at 55%, Trade Arabia said.

The rate for international firms is likely to fall, and that for locals to rise, Saleh said, Trade Arabia reported.

Tax breaks may also be introduced for specific sectors including IT, telecommunications and petrochemicals, Trade Arabia said.

Saleh confirmed that there are no plans to introduce income tax for individuals, Trade Arabia said.

Doha-based Ian Anderson of Pinsent Masons, the law firm behind, said: "This is an interesting move from Kuwait. This is the first GCC (Gulf Cooperation Council) state to look to harmonise their tax rates across all classes of business and ownership. Long term this is what the international community will be looking for as the model of local preference and a plethora of free zones is not sustainable."

"Some commentators may link it to the effect of the fall in the price of oil but a more positive viewpoint is that Kuwait is leading the way in modernising its corporate tax regime," said Anderson.

In September 2014 the Saleh announced that the Kuwait government  would suspend its 'offset programme', through which foreign companies that win large government contracts are required to invest in the local economy, in order to attract more overseas investors to the state.