Kuwait is delaying the implementation of a 5% value added tax (VAT) until 2021, according to a statement posted this week on the website of the country's parliament.
The statement did not go into details as to the cause of the delay, but added that in the meantime Kuwait’s ministry of finance will consider pushing ahead with selective taxes on the likes of tobacco, soft drinks and energy drinks.
Kuwait was originally expected to introduce the tax in 2018, as all GCC member states had jointly agreed to implement VAT as early as this year as part of a collective effort to offset falling oil revenues. So far, only Saudi Arabia and the U.A.E. have introduced VAT (although the U.A.E. recently rolled back VAT on gold, diamonds and other precious metals).
Bahrain’s ministry of finance still plans to implement VAT in 2018, according to a statement published by its state-run news agency this past January, but no firm date has been released. Oman has reportedly delayed VAT until 2019, while Qatar’s status is unknown.
A paper published by the staff of the International Monetary Fund in December 2017 estimated that VAT in the GCC could help generate additional revenue in the range of about 1.5-3.0 percentage points of non-oil GDP.