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$660m a year ‘sin tax’ target set by Kuwait

Kuwait sin tax Noora Al-Fassam Kuna
Noora Al-Fassam, Kuwait's finance minister, did not identify the products to be targeted by the proposed 'sin tax'
  • Tax on ‘harmful to health’ items
  • Company income tax also planned
  • Boost for non-oil revenue

Kuwait hopes to raise 200 million dinars ($660 million) a year through a “sin tax” on unhealthy products as part of tax reforms proposed by the International Monetary Fund, the country’s finance minister said on Wednesday.

Noora Al-Fassam told the official Kuwaiti news agency that her ministry was working on a new law for a “selective tax” that targeted goods that are harmful to human health, to boost non-oil revenue. 

The minister said that she hoped that the tax will bring in around 200 million dinars a year, but did not identify the products to be targeted.

Al-Fassam also said there were plans to impose income tax on companies operating in Kuwait, though she did not provide further details.

The minister’s comments came after a decision by Gulf Cooperation Council (GCC) members to adhere to so-called Pillar 2 standards sponsored by the Organisation for Economic Cooperation and Development, which mandate a 15 percent corporation tax on multi-national businesses.

She said last week that the Kuwaiti tax would affect nearly 300 multi-national entities, 45 from Kuwait and other GCC states and 250 from other countries. Such a tax would raise nearly $825 million a year, Al-Fassam said.

In December the UAE announced a 15 percent domestic minimum top-up tax on multinationals and Oman followed suit earlier this month.

On Wednesday, Al-Fassam said multinational entities that will be excluded from the 15 percent tax comprise government institutions, non-profit and international organisations and pension and investment funds. She said the intention was that revenues from the tax would start to land in the 2027-2028 budget.

A Kuwaiti think-tank said last week that the new tax was a step in the right direction to balance the budget and that it would help attract investment.