Worldwide VAT, GST and Sales Tax Guide 2022
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Kuwait ey.com/GlobalTaxGuides
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Kuwait is a Member State of the Gulf Cooperation Council (GCC). The GCC consists of Bahrain, the Kingdom of Saudi Arabia, Kuwait, Oman, Qatar and the United Arab Emirates. The GCC has agreed that VAT will be implemented by each Member State. At the time of preparing this chapter, the Kingdom of Saudi Arabia, United Arab Emirates, Bahrain and Oman are the GCC Member States to have implemented VAT. The Kuwait Cabinet has approved a bill that approves the GCC Unified VAT Framework Agreement and the GCC Unified Selective Tax Agreement. The bills are submitted for the approval of the National Assembly. However, there is no implementation date announced as of yet for Kuwait. It is likely to be implemented in 2022/2023. The GCC Common VAT Agreement contains the main principles of the GCC VAT system and sets out the options that individual Member States may choose in terms of the VAT treatment applicable to certain supplies and business sectors. The options are primarily administrative, and where aspects are not dealt with by the GCC Common VAT Agreement, then each Member State may determine individually. At the time of preparing this chapter, the GCC Common VAT Agreement has no direct effect in the GCC Member States, except if the respective Member States’ domestic VAT law specifically refers to the provisions in the Common Agreement. The summary set out below is based on the GCC Common VAT Agreement.
A. At a glance Name of the tax Local name Date introduced Trading bloc membership Administered by VAT rates Standard Other
Value-added tax (VAT) Value-added tax (VAT) Expected to be implemented by 2022/2023 Gulf Cooperation Council (GCC) To be confirmed 5% Zero-rated (0%) and exempt
938
VAT number format VAT return periods Thresholds Registration Mandatory Voluntary VAT return period Recovery of VAT by non-established businesses
To be confirmed based on the local VAT legislation Monthly/quarterly – to be confirmed based on the local VAT legislation USD100,000 (approx. KWD30,400) USD50,000 (approx. KWD15,200) Monthly/quarterly – to be confirmed based on the local VAT legislation Yes (there are provisions under the GCC VAT Framework Agreement that allow VAT refund for nonresidents, subject to the satisfaction of the stipulated conditions)
Transitional provisions
Each Member State outlines in their domestic VAT law the transitional provisions, which include the following: • VAT due on supplies of goods and services and the import and export of goods is effective from the date of the enforcement of the local VAT law in the Member State. • Each Member State determines the VAT registration deadline for taxable persons who are obliged to register from the date of the enforcement of the local VAT law. • Each Member State may ignore the date of the invoice or the date of the payment and consider the tax due date the same as the date of supply. This is regardless of any other relevant regulation. This includes cases where the tax invoice is issued, or payment is received, ahead of the date of the enforcement of the local VAT law, or ahead of the VAT registration date, and where the supply took place after this date. • For continuous supplies that are carried out partially ahead of the date of enforcement of the domestic VAT law, or ahead of the VAT registration date, and partially after this date, the part that is carried out before the date of enforcement or registration shall not be taxed.