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Kuwait rejects IMF business tax proposals

The Kuwait government has decided not to impose business profit taxes or lift subsidies on public services to cut its budget deficit, against advice from the International Monetary Fund (IMF), according to local media reports. 24 Sep 2015

The IMF had recommended the tax to reduce the country's state budget deficit, caused by a fall in oil prices.

Kuwait MP Mohammad Al Jabri told the Kuwait Times that while "we have to be transparent with the Kuwaiti people that we face real problems", Kuwait’s National Assembly financial and economic affairs committee refused to accept the plans.

The committee decided that any treatment of the economic situation must not have a negative impact on Kuwaiti citizens, and called for alternative solutions, Al Jabri told the Kuwait Times.

Potential alternative steps include Islamic taxation, a Build-Operate-Transfer arrangement for infrastructure projects, and health insurance schemes, the Kuwait Times said.

Doha-based tax expert Ian Anderson said: "The focus in the region has been on the planned introduction of VAT across all GCC countries in a coordinated manner. Meanwhile countries such as Kuwait are looking for further tax by extending the scope of its corporate income tax, and even the UAE is looking at taxing business profits."

The Kuwait government lifted subsidies from diesel, kerosene and aviation fuel in July, the Kuwait Times reported at the time.

The country is also considering harmonised corporate tax rates for local and foreign firms.