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Sunday , October 17 2021

Govt discussing new amendment to trade act to address interest inflation

Some banks hiked gross interest on principal loan

KUWAIT CITY, Jan 9: At a time, when the popular and parliamentary claims continue to be made regarding the reduction of consumer loans, the government agencies are discussing new amendments to the Trade Act to address the issue of interest inflation on loans to citizens, reports Al-Qabas daily.

In this regard, the sources revealed that the Fatwa and Legislation Department is studying amendments to the trade law that the Central Bank, investment and finance companies bear any interest calculated on frozen loan in order to relieve borrowers.

The sources pointed out that the Fatwa and Legislation Department has addressed the relevant authorities on the addition of a new paragraph to Article 115 of Decree Law No. 68 of 1981 on the issuance of the trade law, which the Ministry of Commerce and Industry has responded and said there is no need o introduce such amendments.

“If the Central Bank of Kuwait finds that, other than the cases referred to in the preceding paragraph, the debtor bears any interest on frozen interest or any increase in the value of the debt, the creditor bank or the investment company pays the increase,’ the Fatwa and Legislation Department explained.

The reasons for the proposed law were that “although the above-mentioned provision prohibits interest on frozen interest, and in any case the total interest of the creditor may not be more than the capital, it has been noted that some banks took interest on zero benefits and increased the gross interest on the principal amount of the loan.

In another development, the Dutch government recently released the blacklist of low tax countries consisting of 21 countries including Kuwait, Kingdom of Saudi Arabia, United Arab Emirates, Bahrain and Qatar as part of new procedures to combat tax evasion, reports Al-Qabas daily.

According to International Advisor website, the Dutch government has affirmed that the blacklist will contribute to ongoing efforts to control foreign companies and prevent companies from transferring their assets to low taxation countries.

The blacklist will be used to carry out conditional deduction of tax on interests and revenues starting from Jan 1, 2020. This means that companies registered in countries on the Dutch blacklist will pay 20.5 percent tax on interests and returns received from The Netherlands.

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