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50% to 100% taxation rate on some commodities
KUWAIT CITY, July 13: Ministry of Finance has prepared a bill for implementation of selective tax on some commodities such as tobacco, and energy and soft drinks, reports Al-Qabas daily.
This draft law is in line with the agreement among the Gulf Cooperation Council member states to implement selective tax on certain commodities during the current fiscal year.
All of these selective tax commodities manufactured inside and outside Kuwait will be taxed. As per the bill, the following activities will be subjected to taxation
1. Manufacturing the selective commodities inside Kuwait
2. Exporting the selective commodities
3. Importing the selective commodities from any of the GCC countries.
The law will not override the laws of the country that ban import or export of certain products.
The taxation rate in line with the GCC agreement will be as follows for the selected commodities —
1. Energy drinks — 100 percent
2. Soft drinks — 50 percent
3. Tobacco and tobacco-based products — 100 percent
4. Alcoholic beverages (not applicable in Kuwait) — 100 percent
5. Pork (not applicable in Kuwait) — 100 percent
Selective tax will not be applicable for the following cases —
1. Manufacturing, transforming, possessing, storing or receiving the abovementioned commodities that are manufactured locally by the authorized body
2. Transporting the commodities under tax-suspending conditions for the following cases
a. from a tax warehouse to another inside Kuwait
b. from a tax warehouse inside Kuwait to another in any of the GCC countries or vice versa
c. from a tax warehouse inside Kuwait to a location where these commodities will be exported outside of GCC region based on the unified customs law
d. importing to a warehouse inside Kuwait
Selective commodities are ready to be sold if they meet the following conditions —
1. Manufactured outside the conditions that suspend the tax
2. Released from any of the conditions that suspend the tax
3. Possessed outside any condition that suspend the tax and where tax is not paid
4. Completion of final customs clearance
5. If lost or damaged under a taxsuspending condition and the owner cannot prove that they were lost or damaged by him
6. Completion of final customs clearance for the selective commodities that are brought from any of the GCC countries to Kuwait
1. An executive decree will organize the application rules as well as the mechanism for transporting the above mentioned commodities under the tax-suspended conditions
2. Value of the selective commodities including the tax will be determined based on the individual price and in accordance with the list of prices agreed by the GCC tax authorities Individuals required to pay the selective tax will be –
1. Those who produce the selective commodities outside the taxsuspending conditions
2. Those who possess the commodities for which the tax is not paid outside the tax-suspending conditions
3. The authorized person when releasing the commodities from the tax-suspending conditions
4. The authorized person when offering commodities for sale due to loss or destruction under taxsuspending conditions, according to provisions of clause 2H in article 5 of the law
5. Importer of the selective commodities .
The authorized person when moving the selective commodities in violation of conditions guiding the suspension mentioned in article 5 of the law
7. Any others who offer selective commodities for sale based on the following conditions –
a. If Kuwait is the first point of entry for selective commodities and they are not under the tax-suspending condition, tax will be imposed on them
b. For selective commodities already on sale and attracted tax in a GCC member state before imported to Kuwait, tax will be imposed on the commodities at Kuwaiti point of entry.
c. Those who already paid tax can deduct or obtain refund for the tax paid on the commodities in the following situations –
■ Selective commodities already sold in Kuwait and later exported or re-exported for business purposes outside the GCC countries
■ Using selective commodities to produce other selective commodities that are due for tax
■ Those who paid tax on certain selective commodities in a GCC member state and later moved to another member state where he paid tax on the same commodities should approach the concerned tax authority in that country for the refund of the tax.
The minister, based on the recommendation of the ministerial committee, can add other situations for refund. The bylaw shall stipulate conditions and procedures for such a refund.
Conditions for declaration when importing –
1. The taxpayer must declare the tax due upon import as stipulated in the unified customs law
2. The taxpayer must register with the Tax Department, regardless of the number of businesses he has
3. The tax period, in accordance with the provisions of this law, is one Gregorian month beginning on the first day of the month and ending on the last day of the month
4. The taxpayer shall submit tax returns within fifteen (15) days from the end of each tax period, even if he has not carried out any transactions during the tax period
5. For the first tax period after registration, the taxpayer shall submit tax returns for the period from the date of registration until the end of this tax period
6. It is allowed to extend the period of submission of tax returns referred to in article 15 of this law by a decision from Minister of Finance
7. The administration may exempt some taxpayers or those who are obliged to pay the taxes from submitting the returns or from registration thereof, in accordance with the rules determined by the executive bylaws
8. The taxpayer must pay the due taxes for each tax period within fifteen (15) days from the end of each tax period.
9. In case of payable taxes but when not obliged to register, the taxpayer has to inform the Tax Authority about the event of payable taxes within 15 days.
10. The Tax Authority is concerned with tax administration and collection in accordance with the rules and regulations specified by the concerned member state.
11. The Tax Authority reserves the right to license any person to allocate a tax warehouse in accordance with the rules and regulations specified by the concerned member state.
12. The Tax Authority reserves the right to place a mark to distinguish selective commodities for control purposes.
The concerned authority can issue specific rules and regulations on such marked selective commodities.
1. Subject to reciprocity principle, diplomatic and consular bodies, international organizations, official diplomats and consular corps admitted into any of the member states shall be exempted from selective tax.
2. Selective commodities possessed by passengers arriving at any member state shall be exempted from selective tax, provided they are not used for commercial purposes, and the conditions and regulations set forth in the unified customs law are met. Unified Law of Customs.