At a time when about 138 countries are preparing to apply a tax on multinational companies at the rate of 15 percent of the profits on companies whose annual revenues exceed 750 million Euros (about 157.6 million dinars), after those countries signed the Global Minimum Tax Agreement (GloBE), Kuwait is still tweeting outside the flock, as it is the only Gulf country that has not joined the agreement yet, which would miss Kuwait’s opportunity to benefit from revenues of tens of millions of dinars annually, reports Al-Rai daily.

According to the agreement, companies whose revenues exceed 750 million Euros and own subsidiaries or branches and legal entities abroad, and operate in countries that have signed the global minimum tax agreement, are obligated to pay the 15 percent tax annually. If we know that Kuwait currently collects taxes on all companies, totaling about 3.5 percent annually (zakat and labor support), then the country’s failure to join the “GloBE” agreement means that it waives the tax difference of 11.5 percent in favor of other countries, as Kuwaiti companies operating in other countries that signed a 15 percent tax agreement will be obligated to pay this difference in those countries, and the result is the loss of millions in annual revenues for the state treasury.

However, the question is, “What prevents income tax from being applied to multinational corporations locally?” Informed sources stated that Kuwait’s failure to join the global minimum tax agreement is tantamount to a waiver for the country to collect taxes on companies whose revenues exceed 750 million Euros (157.6 million dinars) for the benefit of other countries. The sources pointed out that at a time when 138 countries are preparing to apply a tax of 15 percent of the profits on multinational companies whose annual revenues exceed 750 million Euros at the end of this year, Kuwait is still tweeting out of the flock, as it is the only Gulf country that did not join the global agreement, which would waste tens of millions of dinars on the state treasury annually.

Sources added that Kuwait seeks to support non-oil revenues through activities and measures that diversify sources of income in the future, noting the endeavor to involve the private sector in strategic roles within the framework of ensuring real development in the country. It is no secret that in Kuwait there are dozens of financially solid groups and companies known for their spread regionally and globally, which makes them able to achieve revenues that exceed the limits set at 750 million Euros, which requires taking proactive and adequate measures to deal with tax developments, especially since other GCC countries have already started preparing to apply the tax, led by Saudi Arabia, the United Arab Emirates and Qatar.

The sources estimated the number of companies and institutions whose combined revenues exceed 750 million Euros (257.6 million dinars), and multinational companies on which tax applies at 15 percent of profits annually, are no less than 20 companies and institutions, stressing that these companies must take into account the upcoming tax changes, while the state should prepare to adopt the new tax updates and deal with what is happening around the world. The leaders of the 27 European Union countries approved, during a summit in Brussels in December last year, the imposition of a minimum tax of 15 percent on the profits of multinational companies, in a unanimous decision, with the measure to enter into force on December 31. The Organization for Economic Cooperation and Development (OECD) had previously revealed the completion of a global agreement for about 136 countries out of a total of 140 targets (which later increased to 138 countries) to impose a minimum tax on profits of multinational companies at 15 percent, as the agreement was scheduled to enter into force last June, while it is currently likely to start at the end of this year.

© 2022 Arab Times Kuwait English Daily. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).