ABCK-AmCham Kuwait, EY Kuwait and Dalal Al Mulla Hosts a Tax Seminar
June 19, 2022- ABCK-AmCham Kuwait hosted a tax seminar in collaboration with EY Kuwait and Dalal Almulla Legal Group. The tax seminar was organized to provide an overview of the Corporate Income Tax landscape in Kuwait including recent developments. The seminar kicked off with opening remarks by Dr. Arezou Harraf, the Vice-Chair of the American Chamber of Commerce, as she welcomed the participants and introduced the key speakers for the event starting with Amit Arora, Tax Partner with EY Kuwait, and Dr. Nabeel Alexander, Consultant at Dallal Almulla Legal Group. Dr. Harraf also gave a special welcome to special guests from the Spanish Embassy, the Swiss Embassy, and the Kuwait Direct Investment Promotion Authority (KDIPA).
The first presentation by Amit Arora covered Kuwait’s corporate Income tax landscape and the recent developments. Amit discussed the economic landscape in Kuwait and its effect on doing business in Kuwait. He also spoke about the Corporate Income Tax regime in Kuwait, the 5% tax retention requirement, the possible introduction of VAT, transfer pricing-related updates in the region, and the Kuwait Direct Investment Promotion Law.
Amit started the presentation by covering some of Kuwait’s key economic indicators, such as the ranking of Kuwait among the Gulf Co-operation Council (GCC) countries. Oil reserves in Kuwait, the contribution of Oil and related products to Kuwait’s GDP and to the export revenue. Amit also discussed the current inflation in Kuwait and the composition of imports for Kuwait.
Subsequently, Amit highlighted the mega and active development projects in Kuwait which include construction, energy and industry, transport and power, and water, highlighting the number of opportunities for investment available in Kuwait.
Tying the discussion to foreign investment, Amit discussed the applicability of Corporate Income Tax on foreign companies in Kuwait and the taxes applicable on the Kuwaiti Shareholding Companies and the companies listed on the Kuwait stock exchange.
After providing an overview of applicable taxes in Kuwait, Amit discussed the obligations, exemptions, the option to obtain the advance No Objection Letter / Tax Clearance Certificate from the Kuwait Tax Authority, risks/tax exposure on failure to retain, and the requirement to submit copies of subcontract agreements for the 5% tax retention on payments.
Amit concluded his presentation by discussing the key role played by KDIPA in promoting foreign direct investment in Kuwait and the benefits granted by KDIPA to foreign investors (i.e. license to establish a 100% foreign-owned entity in Kuwait and tax exemptions).
For the second presentation, Dr. Alexander explained the U.S. taxation system for U.S. taxpayers, and what is considered to be a ‘U.S. Person’. A U.S. person does not necessarily have to be residing in the U.S. in order to be considered a taxpayer; Dr. Alexander explained that Green Card holders, citizens by birth, and naturalized citizens fall under this category, even if they have never resided in the U.S. The speaker mentioned the tax return for single >65 Min. annual income of $12,400, single <65 Min. annual income of $14,050, and couples>65 Min. annual income of $24,800. He also mentioned that Married couples have the option to file jointly and file separately, as he explained the benefits of each. Next, Dr. Alexander explained what the Foreign Bank Account Report (FBAR) was, why it came about, the requirements to file FBARs, the obligation, and the penalties for not failing to inform the U.S. government about a foreign bank account, whether it is intentional or unintentional. The speaker noted that foreign banks doing business with the US must assist the US search for tax violators by identifying US persons. The speaker expanded on returning tax filers and highlighted the Offshore Voluntary Disclosure Program (OVDP) which allows total forgiveness for previous errors in filing as it assumes that the lack of filing from the US person was not done on purpose- but was done due to the lack of knowledge or misinformation. Dr. Alexander finalized his presentation by discussing the US government’s economic push through stimulus checks. He noted that many US persons have not received their checks due to them living abroad, and he explained how to inquire about it if the individual is living oversea. The session was concluded with an interactive Q&A session from the audience.
To learn more about Kuwait’s Tax framework, please reach out to Ernst & Young Kuwait at: [email protected]
To learn more about Filing taxes as a U.S. person, please reach out to Dalal Almulla Legal Group at: [email protected]