Most companies in GCC states not completely ‘VAT prepared’ – ‘Kuwait withdraws KD 28.575 bln from national reserve’
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KUWAIT CITY, July 17: Most of the companies in GCC member states are not completely prepared for implementing Value- Added Tax (VAT) system, reports Al-Shahed daily.
According to a new survey conducted by the Association of Chartered Certified Accountants (ACCA), UK in cooperation with Thomson Reuters, there is massive absence of preparedness and awareness among companies in Kuwait and the region on the effect of VAT on them.
Only six months remain for the GCC states to implement the tax system, which is expected to come into effect by early 2018. The survey indicated that only 11 percent of the participants are aware of the effects of implementing VAT on their operations while 49 percent are in the process of evaluating the effects of VAT.
Meanwhile, Deputy Prime Minister and Minister of Finance Anas Al-Saleh disclosed that the country has withdrawn KD 28.575 billion from the national reserve in three years, stressing that the futuregenerations- reserve law does not allow withdrawal due to which the withdrawals were made from the public reserve, reports Al-Qabas daily.
In response to a parliamentary question raised by MP Osama Al-Shaheen, Minister Al-Saleh revealed that the country issued bonds worth $8 billion (equivalent of KD 444 million) on March 20 in the international market, indicating that Kuwait never issued any international bond in the past.
Regarding the concept for value of the new lending, he explained that the strategy for lending in the current year is still being prepared. On that basis, the estimated value of the rate of lending for years covering 2017-2020 would be fixed. He affirmed that Kuwait’s bond is the best in the Arabian Gulf region, considering the references from international banks and financial institutions, adding that the factors considered for the rating include the level of subscription and low cost of lending.
Industry
In another report, Ministry of Commerce and Industry has referred a proposal for the amendment of the laws governing the Authority for Protection of Competition affiliated to Fatwa and Legislation Department as a preliminary step to referring the proposal to the parliament in the upcoming parliamentary term, reports Aljarida daily quoting ministerial sources.
They indicated that the current amendments were based on coordination with the World Bank in the framework of its ongoing cooperation with Kuwait to develop the local laws. The sources explained that the proposal consists of amendments to several articles of the current law and removal of some new ones including increased independence of the authority and allocation of independent budget for the authority.
The government was previously opposed to these two amendments and preferred the administration and financial structure to continue being under the authority without any changes, unlike other authorities such as the telecommunication authority. The amendments also include giving the authority the ability to impose penalties and sanctions as deemed suitable based on the type of violation and the level of damages that could result from practices that negatively impact competition as well as monopoly. This will ensure “creation of a competitive economic environment based on the economy’s competency through implementation of all aspects of the competition protection law in a manner that will achieve equal opportunities among various sectors and fair economy units in the local market. This will in turn benefit the national economy and the consumers due to existence of produce and its diversification amid better quality and reasonable prices”.
The sources indicated that the amendments include redefinition of “control”, as it will determine and elaborate all cases for which there could be an actual “controlling” factor in a certain economy sector in the country followed by presence of a suitable mechanism to deal with these cases and impose suitable directives. They said Ministry of Commerce and Industry, through the new amendments, is striving to align the work of the authority with that of the Capital Market Authority, which enjoys high-level of independence in its work and extensive authorities in imposing penalties and sanctions, developing the market and increasing its ability to attract foreign investors. The ministry considers these amendments as “one of the main pillars on which the free-market economy stands in line with freedom of competition among various economy units in a manner that assures operations in accordance with proper and fair mechanism and principles within the market”.
The sources explained that the Authority for Protection of Competition reviews competitive activities and approves or denies them. This is because it protects free trade and prevents monopoly activities in a manner that will create market stability and encourage international companies with its financial abilities and high-level technological skills in terms of entering the local market. Other tasks of the authority are – endorsement of policies and necessary procedures to protect and support competition, receiving competition-related notifications, applications and complaints, and investigations of agreements, contracts and practices.
It also compiles market data with the cooperation of relevant authorities, demands disclosures from concerned persons, and follows up notified agreements, contracts, practices, mergers, combinations of management, unions, and acquisitions of assets. In addition, the authority also receives complaints from people concerning unfair trade activities.
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