Finance ministry eyes excise tax instead of VAT

Finance ministry eyes excise tax instead of VAT

KUWAIT: Finance ministry sources said the application of value added tax in Kuwait during the current circumstances will be widely rejected at the popular and parliamentary levels. The government has excluded it from its plans during the next three years at least, indicating it will resort to the application of excise tax instead of VAT as its first choice for tax collection.

“The application of excise tax will include tobacco and its derivatives, soft and sweetened drinks and luxury goods such as watches, jewelry and precious stones, as well as luxury cars and yachts,” sources revealed to Kuwait Times, pointing out the value of the proposed tax on these goods will range between 10 and 25 percent. The sources added the government wants to apply VAT in accordance with its agreement with Gulf Cooperation Council countries, but it must be approved by the National Assembly, which is currently difficult in light of popular and parliamentary rejection.

“With intensifying inflation fears, which have recorded historical levels in major industrialized countries, its effects bounce back to Kuwait and the region. Moving forward with such a type of tax in the present time may result in sharp rises in prices that cannot burden the consumer,”