International auditing firms in Kuwait

Kuwait to postpone the VAT implementation to early 2020

On 19 March 2018, Al-Qabas newspaper stated: “informed sources revealed that the Kuwait Ministry of Finance, postponed any arrangements for the application of VAT in Kuwait pending the official sanction of VAT Law by the National Assembly, indicating that the VAT preparations are on hold now due to adverse attitudes towards the VAT Law application obstructing its enactment during the coming period.

The sources pointed out that even if the VAT Law would have been enacted during this year by the Parliament, the VAT would be only actually applied by January 2020 since the management and technical preparations within the Ministry of Finance would need more than one year in order to be capable of handling accounting and management operations required by VAT application”.

It is worth mentioning that on 27 November 2016, GCC States signed the Common VAT Agreement of the States of the Gulf Cooperation Council. Pursuant to the said Agreement, the six GCC States agreed to introduce the VAT at a rate of 5% where each of the member States will set its respective implementation date.

Common VAT Agreement of the States of the Gulf Cooperation Council has come into force since Monday, January 1st, 2018, after being approved by the Gulf Cooperation Council (GCC) Summit in Riyadh in 2015, particularly by the Kingdom of Saudi Arabia and the United Arab Emirates decided to introduce VAT starting from 1 January 2018.

We would like to highlight that companies operating in the State of Kuwait should now get ready for the VAT implementation requirements, and not wait till the last moment of the implementation timeframe. They should investigate the impact of VAT Law, when adopted, on their internal systems since this will require amendments to policies and procedures and the development of IT systems and processes for the exchange of reports with the Ministry of Finance.

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