Kuwait said it remains committed to introducing a harmonised Value Added Tax (VAT) regime by 2019 and was working towards that goal.

The Gulf nation had signed a VAT Treaty along with the other representatives of the GCC states.

The Treaty acts as the basis for the domestic VAT legislation by stipulating certain principles, which must be followed by all members, while allowing Kuwait to opt for different VAT treatments in relation to some supplies, said leading advisory firm Deloitte in its  “Doing Business Guide – Understanding Kuwait’s tax position.”

It provides an overview of the tax position of the country through it’s transition to VAT and other tax changes affecting the GCC country.

The guide addresses the key tax considerations for doing business in Kuwait, alongside key legal, economic and market drivers which impact clients who are looking to invest in the country, or those who have been present there for some time, but are looking to undertake a review of their tax exposures, which may include remedial or long term solutions.

"Kuwait is opening its doors to foreign investment and encouraging companies to invest in the country to be part of its future development plans. Kuwait has previously announced its “2035” vision, which includes various mega projects,” explained Ihab Abbas, a partner and tax leader at Deloitte Kuwait.

The country offers a series of potential benefits to foreign investors including income tax holidays up to 10 years, and exemptions from custom duties for importing relevant equipment and materials into the country.

"The plan will mainly focus on developing North Kuwait and the different islands around the country. The development program is aimed at attracting investment, developing competitiveness, improving legislature to support the economic and social systems whilst creating more than 200,000 jobs. Kuwait has indeed become an attractive landscape for investment opportunities," noted Abbas.

"The Gulf nation continues to create an encouraging investment climate for the private sector to invest in infrastructure projects," he added.

The Kuwait Direct Investment Promotion Authority (KDIPA) has also introduced a scoring system that is followed when evaluating the issuance and approval of the investment licenses, according to Deloitte.

"The aim of the standards is to encourage businesses who have successfully contributed to Kuwait’s economy by offering them a set of incentives on Direct Investment promotion in the State of Kuwait and Executive Regulation," stated Abbas.

"KDIPA has also issued earlier this year a new resolution announcing that the foreign taxpayers could calculate and claim their annual tax credit for their licensed operations. All of this results in promoting investment opportunities in Kuwait," he added.

"The introduction of VAT in Kuwait would entail increased administrative, reporting and record keeping requirements to comply with," remarked Robert Tsang, Indirect Tax Partner, Deloitte Middle East.

"VAT - being a consumption tax - would mainly impact end customers through price hike, although business may experience narrowing margins and increased price competition after the introduction of VAT. Experience from the UAE and Saudi Arabia shows that those business which prepared on time could gain competitive advantage and avoid business disruptions after VAT was introduced," he added.-TradeArabia News Service