As part of Kuwait’s ongoing efforts to tackle the tax challenges brought about by the digitization of the economy, KPMG in Kuwait has announced its annual Talking Tax conference, set to take place on January 23. This conference serves as a platform for professionals to discuss and gain insights into the latest developments in tax regulations and practices.
In a significant move, on November 15, 2023, Kuwait announced its accession to the comprehensive framework of the Organization for Economic Cooperation and Development (OECD) and the G20 on tax erosion and profit shifting. This collaboration involves over 140 member countries and reflects Kuwait’s commitment to combating tax evasion on a global scale.
Zubair Patel, Head of the Tax Department at KPMG in Kuwait, expressed his views on this momentous development, highlighting the positive impact it will have on tax transparency both locally and globally. Patel emphasized that Kuwait’s participation in implementing the tax erosion and profit transfer package, which comprises 15 measures, will contribute to greater coherence in international tax laws.
In response to Kuwait’s announcement, the Organization for Economic Cooperation and Development confirmed that Kuwait has chosen to adopt the option based on two fundamental pillars. These pillars aim to initiate reforms in tax laws, ensuring that multinational companies fulfill their tax obligations appropriately in the regions where they operate.
Under the agreement, any Kuwaiti multinational company, including government institutions, that operates outside Kuwait and generates annual revenues exceeding 750 million euros (approximately 245 million Kuwaiti dinars) will be subject to a 15% tax on its profits. The implementation of these measures is anticipated to commence from the year 2025 onwards.
This move by Kuwait aligns with the global trend of countries taking steps to address the tax challenges posed by the digital economy. As businesses increasingly operate across borders and conduct transactions online, traditional tax frameworks face limitations in capturing and regulating these activities effectively. By joining international efforts to combat tax erosion and profit shifting, Kuwait aims to ensure that multinational companies operating within its jurisdiction contribute their fair share of taxes.
The adoption of these measures is expected to have a significant impact on the tax landscape in Kuwait and beyond. Multinational companies will need to carefully review their operations and assess the potential tax implications of operating in different jurisdictions. This may involve restructuring their business models, optimizing their tax positions, and ensuring compliance with the evolving tax regulations.
Moreover, the implementation of these measures sends a clear message to the international community that Kuwait is committed to creating a fair and transparent tax environment. By actively participating in global initiatives, Kuwait demonstrates its willingness to cooperate and collaborate with other countries to tackle the challenges arising from the digitalization of the economy.
In conclusion, Kuwait’s decision to join the comprehensive framework of the OECD and the G20 on tax erosion and profit shifting reflects its commitment to combat tax evasion and ensure tax transparency. The upcoming Talking Tax conference organized by KPMG in Kuwait will provide professionals with an opportunity to stay updated on the latest developments and gain valuable insights into navigating the evolving tax landscape. As Kuwait takes steps to address tax challenges in the digital economy, it sets an example for other countries to follow in creating a fair and equitable tax system that supports economic growth and fosters international cooperation.
Source: TimesKuwait
