MoF to collect 30% of contracts fee from state-owned properties

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Move reflects govt desire to hike revenues of public budget

KUWAIT CITY, Dec 18: After amending service fees for chalets and agricultural plots, the Ministry of Finance has issued a new decision to inject amendments into the list of allowances for usufruct of state real estate property, allowing the ministry to collect 30% of the contracts money concluded by subcontractors of state-owned property, reports Al-Qabas daily. Ministerial Resolution No. 107 of 2022 regarding the amendment of some provisions related to the usufruct fee for the subcontracting of state private real estate property and service fees included replacing the phrase “30% of the value of annual investment contracts” to become the collection of 30% of the value of subcontracting for the interest of the Ministry of Finance.

The recent decisions to increase fees and allowances for the use of the state’s real estate property refl ect a governmental desire to increase the revenues of the public budget, which was stated in its work program that it recently presented to the National Assembly, including a number of axes, including reviewing the pricing of services, and improving the collection of nonoil state revenues.

The last increase in the rental values of state property was about 5 years ago, as the regulation was amended, which includes 15 sectors, starting from markets to chalets, passing through plots for agricultural exploitation, contracting, universities and private hospitals, as well as resort projects, parks and multi-storey parking lots, where the usufruct allowances were reviewed based on monitoring a large gap between the allowance for the exploitation of state property, and the allowance for the exploitation of private property.

Review
The Council of Ministers directed government agencies to review the list of prices for rents, lands and buildings of state property, in addition to assigning the Public Authority for Industry to study reconsidering the list of prices for commercial and industrial vouchers, which guarantees diversifying sources of income and reducing dependence on oil as the only source of income. The value of the state’s real estate property amounts to about 14.4 billion dinars, according to the final accounts for the fiscal year 2020-2021, an increase of 0.7% over the previous year.

The Ministry of Finance issued a decision to exempt state-owned government companies entirely from paying the usufruct allowance for state real estate property, and Ministerial Resolution No. 108 of 2022 indicated that the regulation of the usufruct allowance for state real estate property does not apply to state-owned companies. According to statistics, seen by Al-Qabas daily, the state’s real estate revenues was about 92.4 million dinars, as the state’s property list includes 8,200 agricultural plots, 2,987 chalets, 10 hospitals, 13 parks, 6 service centers, 5 slaughterhouses, and 24 parking lots, in addition to other items from which revenues are collected.

Repricing
The sources said that the repricing of fees for the use of state property comes as part of a broad government plan to organize and arrange the state’s real estate, especially at a time when the general budget suffers from large deficits because of the reliance on oil revenues and neglecting the development of other revenues, where work is being done to re-evaluate and make inventory of real estate assets, in line with the activation of the comprehensive and integrated system of structural reforms for the government financial information systems project, and the adoption of the accrual principle in recording financial and accounting operations in the State of Kuwait, in accordance with the standards international accounting.

According to the oversight reports, the fees for the use of state lands are not appropriate, in light of the outdated tariff and fee system in force in some government agencies and institutions. The Audit Bureau report called for the need to set fees for usufruct and exploitation of the lands and sites of state property according to appropriate technical studies, in line with prevailing market prices, and taking into account their change and updating according to economic changes and conditions, as well as taking into account the renewal of contracts and licenses for the usufruct of the exploited sites on a regular basis in order to preserve the rights of the contracting parties.

This news has been read 7873 times!

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