Kuwait Might Implement Excise Tax Instead of VAT

Kuwait's Ministry of Finance plans to implement excise tax instead of Value Added Tax (VAT) in the country, the latter is not expected to be implemented for the next three years.

According to sources, the excise tax will be applied to tobacco and its derivatives, soft and sweetened drinks, luxury items, jewellery, precious stones, and luxury cars as well as yachts.

The value of the tax on these goods will range from 10 to 25 percent. 

Although the government is willing to implement VAT because of its agreement with the Gulf Council Countries (GCC), it is very likely to be rejected by the parliament. 

The application of excise tax will not affect low or middle-income people since it will only be implemented on luxury goods, excluding products that constitute the basics of living.

Other than these items, the excise tax will be applied to products harmful to the population's health, which has increased the government's expenditure on medical treatment programs.

The Gulf agreement that Kuwait signed in 2016 required applying the excise tax on all tobacco products, on energy drinks by 100 percent, and on soft drinks by 50 percent.

Although the excise tax will not be applied at this percentage, nonetheless its application on these harmful products emphasizes the government's diligence in reducing the life-threatening effects of these products on the population in Kuwait.