US embassy cable - 05KUWAIT2922

UNCLAS KUWAIT 002922 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN, EPET, KU, EIVN 
SUBJECT: KUWAIT MOVES TO CUT FOREIGN CORP TAX RATE 
 
 
1.  (U) The Financial and Economic Affairs Committee of the 
Kuwait National Assembly voted out of committee on June 26 
the GOK's proposal to amend Tax Law 3-1955 to reduce 
corporate tax on foreign firms from 55 to 15 percent of 
profits.  Kuwaiti-owned corporations currently pay no tax and 
their status would not change under the new law.  The 55 
percent tax rate was instituted in 1955 to capture revenues 
from foreign-owned enterprises operating in Kuwait, which 
were almost exclusively energy-related at that time.  Today, 
the proposal is expected to net considerable revenues from 
non-oil activities, according to Committee sources. 
 
2.  (U) Local papers quote Labeed Al-Abdal, Chairman of the 
Legal Committee, as predicting that the eventual passage of 
the proposal would boost Kuwait's standing as a regional 
financial center.  He characterized the action by the 
Financial and Economic Affairs Committee as testimony to 
Kuwait's commitment to take "into consideration the 
requirements of our competitive economic environment ... and 
the significance of not only reducing the tax rate but also 
attracting foreign investments."  Other of the GOK's 
proposals tied to the corporate tax law, most notably a 
provision to tax Kuwaiti-owned enterprises as well, were 
stripped from the final proposal endorsed by the Committee. 
 
3.  (U) In voting out its bill, ironically the Committee 
recommended that the government speed up the process of 
approving amendments to the corporate tax law, as well as 
consumer protection and anti-monoply laws.  Unfortunately, 
the Committee's own action occurred late in the game for this 
parliamentary session.  The National Assembly closed on June 
29; the Committee's tardiness in approving the bill for 
Assembly-wide vote delays further action until the 
legislature convenes in mid September. 
TUELLER